New Delhi, July 23 (PTI) The government on Thursday permitted FDI in an inventory-based model of e-commerce "exclusively" for export purposes, a move which will help increase India's outbound shipments without impacting the businesses of small retailers.

"In order to facilitate greater exports through easier and increased access of global markets by Indian sellers, the extant FDI Policy has been reviewed and it is decided 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," the Department for Promotion of Industry and Internal Trade (DPIIT) said in a Press Note.

As per the consolidated FDI (foreign direct investment), FDI is permitted in Business to Business (B2B) e-commerce and marketplace model.

However, it is not permitted in Business to Consumer (B2C) e-commerce and inventory-based model of e-commerce where inventory of goods and services is owned by an ecommerce entity and is sold to consumers directly.

The DPIIT has inserted a clause in the policy, which states: "An e-commerce entity is permitted to engage in inventory-based model of ecommerce exclusively for the export of goods/products manufactured and/or produced in India as per the applicable provisions of the Foreign Trade Policy 2023...and the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015". PTI RR RR MR

Foreign investment in inventory-based e-commerce is permitted exclusively for exports of Indian-manufactured or produced goods under export compliance rules. Foreign direct investment in inventory-based e-commerce is permitted exclusively for exports of goods or products manufactured or produced in India. Foreign direct investment remains permitted in business-to-business e-commerce and the marketplace model, while business-to-consumer and inventory-based direct sales to consumers remain prohibited except for the specified export activity. Export-oriented inventory-based operations must comply with the applicable Foreign Trade Policy and foreign exchange regulations governing exports.