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

These firms will have to export goods that are manufactured or produced in India.

However, FDI in the inventory-based e-commerce model retailing is not permitted.

"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.

DPIIT, an arm of the commerce and industry ministry, deals with foreign direct investment (FDI) related issues. It releases policy changes through press notes (PNs).

As per the current FDI policy, overseas investments are permitted in business-to- business e-commerce and marketplace models.

However, it is not allowed in business-to-consumer e-commerce and inventory-based e-commerce models where inventory of goods and services is owned by an online retailer and is sold to consumers directly.

DPIIT has inserted a clause in the policy, which states: "An e-commerce entity is permitted to engage in an inventory-based model of e-commerce 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".

It added that the restrictions on B2C and the inventory-based model of e-commerce will not apply to the export of goods/products through e-commerce.

The decision will come into effect from the date of FEMA (Foreign Exchange Management Act) notification, it said.

The proposal was initially mooted by the Directorate General of Foreign Trade (DGFT) as it was aimed at boosting India's exports through the e-commerce medium.

E-commerce stakeholders, too, have demanded the same.

The decision is important as the government is looking at ways to boost exports through the e-commerce medium.

It is working on other measures as well, such as setting up e-commerce export hubs.

As per estimates, the country's e-commerce exports are about USD 2 billion currently compared to China's staggering USD 350 billion.

The global e-commerce trade is about USD 800 billion and is estimated to reach USD 2 trillion by 2030. PTI RR RR BAL BAL

Foreign investment in inventory-based e-commerce is allowed only for exports of Indian-made goods, while domestic retail remains prohibited. Foreign direct investment in inventory-based e-commerce is permitted exclusively for exports of goods or products manufactured or produced in India. Restrictions on business-to-consumer and inventory-based e-commerce do not apply to these exports, subject to the Foreign Trade Policy 2023 and export regulations. Foreign direct investment in inventory-based e-commerce retailing for domestic sales remains prohibited, with the revised position taking effect upon the relevant foreign exchange notification.