India Mulls Easing FDI Rules to Boost E-Commerce Exports

In what could be a significant boost for e-commerce companies like Amazon, India is reportedly considering easing foreign investment rules. 

The plan would allow e-commerce companies to directly purchase goods from Indian sellers and sell them to overseas customers, a move currently prohibited under Indian law, according to a Reuters article.

At present, foreign e-commerce players can only operate marketplaces that connect buyers and sellers for a fee.

A New Export Model

The proposal, prepared by the Directorate General of Foreign Trade, suggests creating a third-party export facilitation model. Under this, a dedicated export entity linked to e-commerce platforms would handle compliance requirements, reducing the burden on small businesses. 

Currently, less than 10% of small Indian sellers engage in global e-commerce exports due to complex documentation and regulatory hurdles.

Challenges

While Amazon has long advocated for such changes, arguing that they would enable small Indian sellers to expand globally, the move faces strong opposition from the Confederation of All India Traders, a group that represents millions of brick-and-mortar retailers. 

It argues that Amazon’s financial clout could undermine domestic businesses and create risks of products being diverted into India’s local market instead of being exported.

The proposal, which requires cabinet approval, envisions strict penalties and possible criminal action for violations, and may initially be rolled out on a pilot basis.

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