Worker scanning a package in an Indian e-commerce fulfillment center
India’s government has officially launched a new operational framework aimed at stimulating e-commerce exports, a move that permits online marketplaces to export goods directly from Indian sellers. This development follows closely after the exemption of Business-to-Business (B2B) e-commerce exports from foreign direct investment (FDI) regulations.
The Directorate General of Foreign Trade (DGFT) issued a circular on August 5, detailing the new norms under the Foreign Trade Policy, 2023. This policy establishes a registration process for marketplaces intending to export products, with the rules taking immediate effect. The framework addresses key aspects of B2B e-commerce exports, including registration, inventory management, seller visibility, reverse logistics, compliance, and dispute resolution.
A significant provision in the new regime prohibits the stockpiling of goods. E-commerce platforms are now only permitted to procure goods against confirmed export orders, thereby preventing speculative inventory build-up. The commerce ministry emphasized that export inventory must be clearly identified, segregated, and maintained in a digital repository for complete traceability, and cannot be diverted for domestic sales.
Key Provisions of the Framework
The new norms introduce the concept of an “exporter-on-record,” an entity responsible for managing export inventory, ensuring product compliance, and overseeing the export process. These inventory-based cross-border marketplaces are mandated to register with the DGFT.
Exporters are required to maintain a digital repository that links procurement records, Goods and Services Tax (GST) invoices, and export documents to each “seller-on-record.” This repository must be accessible to the DGFT and other authorized authorities.
The exporter-on-record bears the responsibility to ensure that:
- Goods in inventory precisely match seller declarations.
- Inventory complies with all applicable laws prior to export.
- Products meet the requirements of the destination country, including testing, inspection, certification, and licensing.
- Goods adhere to market access requirements such as labeling, packaging, marking, and safety warnings.
For seller protection, the framework grants merchants visibility into consolidated inventory records, including the final sale price, order status, shipment tracking, and destination country. E-commerce platforms must also disclose the manufacturer and brand owner.
Goods failing quality checks are to be returned to the seller within seven days. Returned or rejected goods must be re-exported, returned, destroyed, or otherwise disposed of within 30 days.
A dispute resolution mechanism is also established, referring issues between exporters and sellers to the relevant DGFT regional authority for resolution within 30 days. Further escalations will be handled by the DGFT headquarters.
The framework mandates timely payments to Indian sellers within prescribed timelines, regardless of payment receipt from overseas buyers. Export rebates and refunds are to be passed through to Sellers-on-Record proportionally based on the Free On Board (FOB) value of their goods.
Online marketplaces operating under this new regime must obtain an annual compliance certificate from an independent professional, to be submitted to the DGFT within 90 days of the fiscal year-end.
Market Impact and Background
This policy shift allows players like Amazon and Flipkart to procure products directly from Indian sellers for resale overseas, a significant departure from previous regulations that limited marketplaces to merely connecting buyers and sellers for a fee.
The move is seen as a strategic effort by the Indian government to achieve its target of $200-$300 billion in e-commerce exports by 2030. Discussions and lobbying from e-commerce giants like Amazon, alongside concerns from retail bodies regarding fair competition, have shaped this policy evolution over the past year.
The framework aims to bolster India’s global trade presence in the e-commerce sector while addressing regulatory complexities and ensuring a structured approach to cross-border online trade.
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