India amends FDI rules to boost e-commerce for small businesses, artisans, farmers, and fishermen: Union Minister Piyush Goyal
India amended its Foreign Direct Investment (FDI) rules governing e-commerce, intended to help small businesses, artisans, farmers, and fishermen access wider domestic and global markets through online platforms
The changes are expected to facilitate trade in categories such as handlooms, handicrafts, textiles, footwear, and food products by allowing e-commerce entities to build export-oriented, inventory-based operations for India-made goods
The amendment was announced alongside discussions at the BRICS Trade and Industry Ministers' Meeting held in Jaipur, which covered trade flows among BRICS members, access to finance for smaller businesses, and job creation through emerging technologies such as artificial intelligence
The reform is presented as enabling India's Micro, Small and Medium Enterprises (MSMEs) to use large e-commerce platforms' logistics and distribution networks to reach a wider customer base, in India and overseas
FDI Policy in E-Commerce — Marketplace vs Inventory-Based Model
India's FDI policy for e-commerce distinguishes between two models: the "marketplace model," where the platform is a facilitator between independent buyers and sellers and does not itself own inventory, and the "inventory-based model," where the e-commerce entity owns and sells its own inventory directly to consumers. FDI treatment differs sharply between the two.
Key Details
- Press Note 3 of 2016 (DPIIT, then DIPP) permitted 100% FDI under the automatic route in the marketplace model of e-commerce, provided the platform does not exercise ownership/control over inventory
- Press Note 2 of 2018 tightened marketplace-model rules to prevent indirect control — barring platforms (and their group companies) from selling through vendors in which they hold an equity stake, and prohibiting exclusive-sale arrangements
- 100% FDI in the inventory-based model has, until now, been generally prohibited, except where the e-commerce entity deals exclusively in export of goods manufactured/produced in India
- The 2026 amendment extends and clarifies this export-only inventory-based exception to explicitly cover MSME, artisan, farmer, and fisherman-produced goods intended for cross-border sale, without opening domestic inventory-based retail to FDI
The amendment operates within this existing marketplace/inventory-based FDI architecture — it liberalises FDI in inventory-based e-commerce specifically for export of India-made goods, allowing small producers' output to be aggregated and sold internationally through foreign-invested platforms, while leaving domestic inventory-based retail (a long-standing protection for small traders) untouched.
BRICS — Trade and Industry Cooperation Framework
BRICS is a grouping of major emerging economies that coordinates on trade, investment, and financial cooperation outside traditional Western-led institutions. The Trade and Industry Ministers' track is one of its sectoral cooperation mechanisms, feeding into the annual BRICS Leaders' Summit.
Key Details
- BRICS originated as "BRIC" in 2009 (Brazil, Russia, India, China); South Africa joined in 2010, forming BRICS
- The bloc expanded in January 2024 to include Egypt, Ethiopia, Iran, and the United Arab Emirates, alongside Saudi Arabia's invited (though not fully confirmed) membership, marking the first major expansion since 2010
- The New Development Bank (NDB), headquartered in Shanghai, is BRICS's dedicated financing institution, established in 2015 to fund infrastructure and sustainable development projects in member and partner countries
- Trade and Industry Ministers' meetings under BRICS typically address intra-bloc trade facilitation, MSME financing access, and cooperation on technology and digital economy issues — the themes referenced at the Jaipur meeting
The FDI e-commerce liberalisation was announced in the context of India's engagement with BRICS trade ministers, linking a domestic regulatory change to the broader multilateral push for improving small-business access to finance and markets among BRICS economies.
- FDI in marketplace-model e-commerce: 100% under automatic route (Press Note 3, 2016), subject to Press Note 2 (2018) restrictions on vendor equity control and exclusivity
- FDI in inventory-based e-commerce: generally prohibited, except for entities dealing exclusively in export of India-manufactured goods (basis of the 2026 amendment's extension)
- BRICS founding members: Brazil, Russia, India, China (2009); South Africa added 2010
- BRICS expansion: Egypt, Ethiopia, Iran, UAE admitted from January 2024
- Product categories named for e-commerce export push: handlooms, handicrafts, textiles, footwear, food products
- Venue of the referenced BRICS ministerial meeting: Jaipur