In a bid to protect small retailers, the Centre is mulling putting up safeguards, such as mandating separate warehouses for domestic and international inventory, while allowing FDI for ecommerce exports. 

Citing government sources, ET reported that the government is evaluating making separate warehouses mandatory. The move is aimed at ensuring that the products meant for export are not pushed in the domestic market.

As a part of the proposed ecommerce export model, a foreign-funded ecommerce company will have to set up a separate Indian entity for purchasing products from Indian sellers for selling in international markets. 

Notably, India doesn’t allow FDI in an inventory-based ecommerce model currently. It is only allowed for ecommerce marketplace models. In a bid to boost Indian exports, the Centre has been considering allowing FDI for ecommerce exports.

Last year, the commerce and industry ministry circulated a note seeking comments on allowing FDI in inventory-based ecommerce models, solely for exports.

Earlier, ecommerce major Amazon requested the Indian government to amend FDI rules so that  it can directly buy goods from Indian sellers and export them.

Boost For India MSMEs? 

As per an Inc42 report, the Indian ecommerce sector is expected to cross the $400 Bn mark by 2030. As a result, the sector is one of the favourites of investors. Ecommerce startups raised a total of $1.7 Bn in 2025 across 206 deals.

As per EY, India is currently home to more than 6.3 Cr MSMEs, which account for 43% of the country’s total exports. However, ecommerce exports stand at only $4-5 Bn, translating to 1% of the total exports. 

The move to allow FDI in ecommerce exports can result in companies stepping up procurement from MSMEs, thereby not only increasing India’s exports but also the top and bottom lines of the MSMEs. Besides, dealing with FDI-funded companies can also help decrease the compliance burdens for MSMEs. 

It is pertinent to note that the Centre has taken a number of steps over the past few years to support MSMEs for job creation and making India a global manufacturing hub. In her Budget speech for 2026-27, finance minister Nirmala Sitharaman said that the Centre would launch a dedicated ₹10,000 Cr fund for small and medium enterprises (SMEs) to create “future champions”.

Additionally, the government plans to top up the Self-Reliant India (SRI) Fund, launched in 2021, with ₹2,000 Cr to continue to support MSMEs and provide them access to risk capital.

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