The Indian Directorate General of Foreign Trade introduces a new regulatory framework for inventory-based cross-border e-commerce, aiming to expand digital exports and enhance transparency, traceability, and compliance for small and medium-sized businesses.
India’s Directorate General of Foreign Trade has moved to formalise a cross-border e-commerce route that allows inventory-based exports under a clearer regulatory structure, a step that could broaden the country’s digital export base while tightening oversight of stock, payments and returns. The framework, set out in Notification No. 27/2026-27 and Public Notice No. 25/2026-27, is aimed at improving transparency, traceability and accountability in online export trade.
At the centre of the model are two separate roles. The Exporter-on-Record will handle the international transaction, including customs compliance, logistics and return management, while the Seller-on-Record will supply goods from India against confirmed overseas orders. The separation is designed to make responsibilities easier to follow from purchase to shipment and to reduce the risk that export stock is diverted into the domestic market.
The rules are built around traceability. Inventory must be tied to confirmed foreign orders rather than accumulated speculatively, and digital records are expected to link each shipment back to the relevant seller and order. The framework also places limits on what happens when goods are returned, rejected or not delivered, requiring businesses to follow prescribed disposal or re-export procedures rather than simply redirecting stock for local sale.
The timing of the move is significant. The Economic Times reported that the government has opened the inventory-based model to foreign direct investment for exports only, while The Times of India said policymakers had been examining the proposal as a way to expand India’s relatively small e-commerce export base. Grant Thornton said the change builds on customs reforms introduced from April 1, 2026, including a new approach to courier exports and returned shipments, which helped create the conditions for a more workable export system.
For manufacturers and small businesses, the framework could lower the operational barriers to selling abroad. Many Indian MSMEs have products that can compete internationally but lack the infrastructure to manage foreign logistics, customs documentation, returns and payments on their own. By placing those tasks with an Exporter-on-Record, the model may allow smaller sellers to reach overseas customers through a more controlled structure. That said, businesses will still need active Importer Exporter Code registration, correct product classification and, where relevant, separate authorisations for restricted or strategically sensitive goods.
The compliance burden is likely to rise rather than fall. The model depends on digital record-keeping, inventory mapping, annual audits and clear settlement timelines, including prompt payment to sellers, handling of non-conforming goods and the pass-through of eligible export incentives. For e-commerce platforms and export operators, the practical challenge will be to adapt warehouse systems, contractual arrangements and foreign investment structures so they fit the new export-only regime.
Disclaimer: This content is intended for informational purposes only. Readers are advised to exercise their own judgement, conduct due diligence, or consult a qualified expert before acting on any information provided.
