FDI in Inventory-Based E-commerce for Exports: What Entry 15.2.5 of the NDI Rules (S.O. 4870(E), 2 September 2026) Now Allows

Quick Summary

FDI in the inventory-based model of e-commerce is now permitted for exports. A new entry 15.2.5 in Schedule I of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 allows an e-commerce entity to run an inventory-based model exclusively for the export of goods or products manufactured or produced in India.
The entry was inserted by the Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2026, S.O. 4870(E) dated 2 September 2026. It gives legal effect to DPIIT Press Note No. 3 (2026 Series).
The B2C and inventory-model restrictions in entries 15.2.1 to 15.2.4 do not apply to these exports. For domestic sales, nothing changes: foreign investment in inventory-based e-commerce selling in India is still not permitted.
The export must follow the Foreign Trade Policy 2023, the Handbook of Procedures and the FEMA export regulations. From 1 October 2026 those are the FEM (Export and Import of Goods and Services) Regulations, 2026: nine-month realisation, and nine months from the date of sale for goods sent to a warehouse abroad.

Founders building a direct-to-consumer export brand on foreign capital have long faced one hard rule: an Indian company with FDI could run an e-commerce marketplace, but it could not own inventory and sell it to consumers itself. That rule now has an export exception. This note explains what the amendment to the NDI Rules permits for FDI in inventory-based e-commerce for exports, what it does not permit, and which export rules the business must follow from 1 October 2026.

What exactly changed in the FDI rules for e-commerce?

Schedule I of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (NDI Rules) now carries a new entry 15.2.5 under the e-commerce sector. It reads:

“(a) An e-commerce entity is permitted to engage in inventory-based model of e-commerce exclusively for the export of goods or products manufactured or produced in India in accordance with the provisions of the Foreign Trade Policy 2023 read with the Handbook of Procedures (HBP) and the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015.

(b) The restrictions on Business to Consumer (B2C) and the inventory-based model of ecommerce stipulated under the provisions from serial number 15.2.1 to 15.2.4 above, shall not apply to the export of goods or products through e-commerce as permitted under clause (a).”

RBI’s consolidated text of the NDI Rules records that entry 15.2.5 was “Inserted by Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2026 vide S.O.4870(E) dated 02.09.2026”.

What was the position before this amendment?

Entry 15.2 of Schedule I sets the e-commerce framework. It defines the two models:

Inventory based model of e-commerce: “an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly”.
Market place model of e-commerce: “providing of an information technology platform by an e-commerce entity on a digital and electronic network to act as a facilitator between buyer and seller”.

B2B e-commerce (entry 15.2.1) and the marketplace model (entry 15.2.2) are each permitted up to 100% under the automatic route. Entry 15.2.3 adds the marketplace conditions, including the rule that a vendor’s inventory is deemed controlled by the marketplace if more than 25% of the vendor’s purchases are from the marketplace entity or its group companies. It closes with a note: “Foreign investment is not permitted in inventory based model of e-commerce.” That note is still in the text. Entry 15.2.5 creates an exception to it for exports only.

Point	Before entry 15.2.5	After entry 15.2.5
Inventory-based model, sales in India	Foreign investment not permitted	Unchanged: still not permitted
Inventory-based model, exports of goods made or produced in India	Foreign investment not permitted	Permitted, exclusively for such exports
B2C restrictions in entries 15.2.1 to 15.2.4	Applied to all e-commerce	Do not apply to exports permitted under 15.2.5(a)
Marketplace and B2B models	100%, automatic route	Unchanged

Who can use the inventory-based e-commerce export route?

Read with the definitions in entry 15.2.3, the permission has four parts:

An “e-commerce entity”. The NDI Rules define this as “a company incorporated under Companies Act 1956 or the Companies Act, 2013”. The route is for an Indian company.
Inventory owned by that entity and sold to consumers directly. This is the inventory model as defined.
Goods or products manufactured or produced in India. The entry does not extend to goods sourced from abroad.
Exclusively for export, and in accordance with the Foreign Trade Policy 2023, the Handbook of Procedures and the FEMA export regulations.

Entry 15.2.5 sits inside the e-commerce entry and does not state a separate sectoral cap or entry route of its own. Before a foreign investor subscribes, the company should map its proposed structure against the full text of entry 15.2.

Does this open inventory-based e-commerce for domestic sales?

No. Clause (a) uses the words “exclusively for the export”, and clause (b) lifts the B2C and inventory-model restrictions only for “the export of goods or products through e-commerce as permitted under clause (a)”. An entity with foreign investment that owns inventory and sells it to consumers in India remains outside what entry 15.2 permits. A business planning both domestic and export sales should keep that boundary in mind when it designs its group structure.

Is this the same as DPIIT Press Note 3 of 2026?

DPIIT announced the policy in Press Note No. 3 (2026 Series), “Review of Foreign Direct Investment (FDI) policy on E-commerce Sector”. The press note records that “the restrictions on inventory-based model of e-commerce shall not apply in case of exports of domestically manufactured and/or produced goods/products”, and states: “The above decision will take effect from the date of FEMA notification.” The FEMA notification is the Fourth Amendment Rules, S.O. 4870(E). The policy appears in the NDI Rules as entry 15.2.5. Cite the NDI Rules as the operative law and the press note as the policy decision.

Which FEMA export regulations apply from 1 October 2026?

Entry 15.2.5(a) names the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015. RBI has since replaced them. The Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (Notification No. FEMA 23(R)/2026-RB) are made “in supersession of” the 2015 Regulations, “except in respect of things done or omitted to be done before such supersession”, and “shall come into force from October 01, 2026”. For an export made on or after 1 October 2026, these are the provisions an inventory-model e-commerce exporter works with:

Declaration (regulation 3(1)): the exporter of goods furnishes the Export Declaration Form with the full export value at the time of export. At an EDI port, the EDF is deemed submitted as part of the shipping bill.
Realisation period (regulation 5(1)): nine months from the date of shipment. For goods exported to a warehouse outside India, nine months from the date of sale of the goods from the warehouse. Where the export is invoiced or settled in Indian rupees, twelve months. The AD bank may extend the period on the exporter’s request citing reasons.
Small-value closure (proviso to regulation 4(2)): where the shipping bill is up to Rs 10 lakh (or its foreign-currency equivalent), the EDPMS entry may be closed on the exporter’s declaration that payment has been realised, in full or otherwise. The declaration may also be given quarterly for bulk closure.
Reduction in value (regulation 6) and third-party receipts (regulation 8): both are at the AD bank’s discretion. Under regulation 8, the bank may permit third-party receipts if it is satisfied with the bona fides of the transaction.

The realisation rules from 1 October 2026 are explained in our note on the FEMA export realisation period from October 1, 2026.

What reporting follows when a foreign investor funds the company?

The new entry changes what the company may do, not how foreign investment is reported. The issue of equity instruments, such as shares, to a person resident outside India is still reported in Form FC-GPR “not later than thirty days from the date of issue” under RBI’s Master Direction on Reporting under FEMA (updated as on 1 October 2026). Our guide to FC-GPR and FC-TRS filing deadlines covers the steps. For the wider clean-up of RBI’s FEMA circulars this year, see our note on RBI’s withdrawal of 732 FEMA circulars.

Checklist for founders and their CAs

Test the business model against entry 15.2.5: Indian company, its own inventory, goods manufactured or produced in India, sold exclusively for export.
Keep domestic sales outside the foreign-funded inventory entity, because the entry permits the inventory model for exports only.
Set up EDPMS tracking under the 2026 Regulations: date of shipment for direct consumer shipments, date of sale for stock held in an overseas warehouse.
Use the Rs 10 lakh declaration route with your AD bank for small-value shipping bills, individually or quarterly in bulk.
Report the foreign investment in Form FC-GPR within thirty days of issuing the shares.

Sources

Source: Ministry of Finance (Department of Economic Affairs), Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2026, S.O. 4870(E) dated 2 September 2026, inserting entry 15.2.5 in Schedule I of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (consolidated text, rbi.org.in).
Source: Department for Promotion of Industry and Internal Trade, Press Note No. 3 (2026 Series), Review of Foreign Direct Investment (FDI) policy on E-commerce Sector, dpiit.gov.in.
Source: Reserve Bank of India, Notification No. FEMA 23(R)/2026-RB, Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, in force from 1 October 2026, rbi.org.in.
Source: Reserve Bank of India, Master Direction: Reporting under Foreign Exchange Management Act, 1999, FED Master Direction No. 18/2015-16 (updated as on 1 October 2026), rbi.org.in.

Planning an export brand with foreign capital?

If you are structuring a foreign-funded company to sell Indian-made goods to overseas consumers, talk to an expert at Tax Update India before the first share issue. Book a quick call to map your model against entry 15.2.5 and the 2026 export regulations.

Disclaimer: This article is for general information only and reflects the instruments cited above as on 2 October 2026. It is not legal advice. Please consult a qualified professional before acting on it.

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CA Adityavikram Banka

Founder at A S Banka Advisors Private Limited

The author is Founder of A. S. Banka Advisors Private Limited & Partner at Dhiraj & Dheeraj.

You can reach out to the author on : [email protected]

www.asbanka.com

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