(MENAFN- KNN India) New Delhi, Nov 3 (KNN) The Commerce and Industry Ministry has circulated a consultation note to central government departments on a proposal to permit foreign direct investment (FDI) in the inventory-based model of e-commerce exclusively for export-oriented operations, an official said.

The move aims to support India's export ambitions while safeguarding the interests of domestic retailers.

Currently, FDI is not allowed in entities operating on an inventory-based e-commerce model, where the platform owns the goods it sells.

Instead, 100 percent FDI under the automatic route is permitted only in marketplace-based e-commerce platforms that act as facilitators between buyers and sellers.

The proposal under review would allow inventory-based e-commerce for goods manufactured or produced in India strictly for export, in line with the existing FDI norms, reported PTI.

The Directorate General of Foreign Trade (DGFT) has put forward the proposal, which is now being examined by the Department for Promotion of Industry and Internal Trade (DPIIT).

Commerce and Industry Minister Piyush Goyal recently said the government is open to the idea, noting that there should be no objection if inventories are maintained solely for exports.

Industry stakeholders have also urged the government to reconsider the policy to support export-oriented e-commerce.

The initiative comes as India seeks to expand e-commerce exports, supported by plans to establish dedicated e-commerce export hubs.

India's e-commerce exports are estimated at around USD 2 billion-far below China's approximately USD 350 billion-while global e-commerce trade is valued at about USD 800 billion and could reach USD 2 trillion by 2030.

A report by the Global Trade Research Initiative (GTRI) notes India could scale e-commerce exports to USD 350 billion by 2030, but highlights banking-related bottlenecks that raise costs and slow growth.

The sector is largely driven by small businesses exporting low- to mid-value products such as handicrafts, garments, jewellery, books, home décor, ayurveda products and sports goods.

With a national target of USD 1 trillion in merchandise exports by 2030, policymakers view cross-border e-commerce as an important vehicle for achieving that goal.

(KNN Bureau)

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