The Directorate General of Foreign Trade (DGFT) on Wednesday issued detailed rules allowing e-commerce companies, including those with foreign investment, to hold Indian-made goods in inventory exclusively for exports, following the government's recent relaxation of foreign direct investment (FDI) norms.
The notification implements the FDI policy changes announced by the Department for Promotion of Industry and Internal Trade (DPIIT) on July 23. Under the new framework, exports must be carried out through a separate legal entity registered as an Exporter-on-Record (EOR) with the DGFT.
The export entity must have an Importer-Exporter Code (IEC) and GST registration, while Indian manufacturers and suppliers will be treated as Sellers-on-Record (SORs). They can supply only goods made in India.
The rules make it clear that e-commerce companies cannot stock goods in anticipation of future demand. Ownership of goods can be transferred to the export entity only after it receives a confirmed order from an overseas buyer. Export inventory must be separately maintained and digitally linked to the seller, buyer and shipping documents.
The notification also requires the export entity to pay Indian suppliers within seven days of accepting the goods, regardless of whether the overseas buyer has made payment or later returns the product.
Export incentives such as Duty Drawback, Remission of Duties and Taxes on Exported Products (RoDTEP) and Remission of State and Central Taxes and Levies (RoSCTL) will be available to the export entity, but these benefits must be shared with suppliers in proportion to the value of their goods exported. The export entity may deduct an administrative fee before distributing the incentives.
Returned export goods cannot be sold in the domestic market, either directly or through another company. The export entity will be responsible for handling rejected or returned consignments.