Quick Answer: Notified: The Department of Economic Affairs, Ministry of Finance has notified the FEM (Non-Debt Instruments) Fourth Amendment Rules, 2026 vide S.O. 4870(E), effective 2 September 2026. New clause: Clause 15.2.5 is inserted into Schedule I of the FEM (Non-Debt Instruments) Rules, 2019. What it permits: E-commerce entities can now run an inventory-based e-commerce model, but only for exporting goods manufactured/produced in India. Carve-out: The long-standing B2C and inventory-based restrictions (clauses 15.2.1 to 15.2.4) are expressly disapplied for this export use case. Scope: Inventory-based e-commerce, export-only, India-manufactured goods.
_Foreign Exchange · FEMA / FDI Policy · Published: 2 September 2026 · Reading time: 6 min · Act: FEMA, 1999 & FEM (NDI) Regulations, 2019 · Notification: S.O. 4870(E)
What Exactly Has Changed?
Historically, FDI policy in e-commerce has permitted only the marketplace-based model and barred foreign-invested e-commerce entities from holding inventory and selling directly to Indian consumers (B2C).
The new clause 15.2.5 carves out a targeted exception: an e-commerce entity may hold and sell inventory of goods manufactured or produced in India, provided the sale is strictly for export, aligning with the Government's "Make in India, Sell to the World" push.
Such export-only inventory-based activity must be carried out in accordance with the Foreign Trade Policy 2023, its Handbook of Procedures, and related export regulations.
The amendment is effective from the date of publication in the Official Gazette, i.e. 2 September 2026, there is no separate transition window mentioned.
Who Should Pay Attention to This FEMA Amendment?
- Foreign-invested e-commerce platforms (marketplace or inventory-based) looking to add an export vertical
- D2C and manufacturing-led export brands exploring direct-to-global-consumer sales of India-made goods
- Cross-border logistics and export-fulfilment companies partnering with e-commerce platforms
- FDI compliance and company secretarial teams updating board-approved business models and FDI reporting
- Legal & tax advisors structuring inventory-based export entities or joint ventures
What Are the Key FEMA Compliance Requirements for Companies?
- Origin test: Only goods "manufactured or produced in India" qualify, imported-and-relabelled inventory will not.
- Purpose test: The inventory-based model is permitted only for export; any domestic (B2C) sale of that inventory would fall back under the general restriction.
- Foreign Trade Policy alignment: Entities must simultaneously comply with FTP 2023 export documentation, IEC (Import Export Code), FEM (Export of Goods & Services) Regulations, 2015 and customs/export procedures.
- No new registration prescribed: The notification itself does not create a fresh licensing step, compliance rides on existing FEMA/FTP export machinery, but internal business-model and downstream investment documentation should be updated.
- Non-compliance risk: A breach of the export-only/origin conditions can attract FEMA contravention and penalty action by the Enforcement Directorate under Section 13.
How Should Companies Structure and Operate Under the New Rule?
- Confirm eligibility. Verify that the goods intended for the inventory-based channel are wholly manufactured/produced in India (maintain manufacturing/origin records).
- Segregate export inventory. Maintain the export-bound inventory distinctly from any domestic B2C stock to avoid inadvertently breaching clauses 15.2.1-15.2.4.
- Update your FDI/downstream investment documentation (Form FC-GPR/FC-TRS filings, shareholder agreements) to reflect the export-only inventory-based activity, in consultation with FEMA counsel.
- Align with Foreign Trade Policy 2023, ensure a valid IEC, applicable export incentive scheme registration, and Handbook of Procedures compliance.
- Set up export-only fulfilment infrastructure (warehousing, customs clearance, shipping bill process) distinct from any domestic operations.
- Brief compliance and finance teams on ring-fencing this activity for RBI/FEMA reporting and annual FDI compliance certifications, specifically the Annual FLA Return and AD Bank intimation.
- Monitor for implementing circulars, DPIIT/RBI may issue operational clarifications; track these through a regulatory-update service.
Where entities commonly go wrong: The most frequent compliance risk is commingling export and domestic inventory under the same SKU pool, which can inadvertently trigger the very B2C/inventory-based restriction this amendment is designed to carve around. Robust inventory tagging and audit trails are essential.
Where Can You Read the Official Gazette Notification?
This note is prepared with reference to the original government notification. Professionals are advised to read the primary source before initiating compliance action: Read the Official Gazette Notification (S.O. 4870(E))
Frequently Asked Questions
Can a foreign-owned e-commerce platform now sell to Indian consumers from its own inventory?
No. The carve-out under clause 15.2.5 applies only to export of India-manufactured goods. Domestic B2C sale from inventory continues to be restricted under clauses 15.2.1 to 15.2.4.
Do goods need to be 100% Indian-origin to qualify?
The notification requires goods to be 'manufactured or produced in India.' Entities should maintain clear manufacturing/origin documentation to substantiate this at any regulatory review.
Is a new license or registration required to use this route?
The amendment does not prescribe a new standalone registration; compliance is built on existing FEMA reporting and Foreign Trade Policy 2023 export procedures, though internal FDI documentation should be updated.
From when is this amendment effective?
The Rules take effect from the date of publication in the Official Gazette, 2 September 2026.
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LexComply Regulatory Research Desk
Legal Disclaimer: This note is prepared for general awareness and is not legal advice. For entity-specific applicability, consult your compliance officer or write to LexComply's advisory desk.