India Mulls to Ease Foreign Investment Rules for E-commerce Export Sector

India’s commerce authorities are exploring reforms that could reshape the role of foreign e-commerce platforms in the country. As per Reuters, the government has prepared a draft policy enabling companies such as Amazon to act as export intermediaries, purchasing products directly from Indian sellers for global customers. 

Currently, foreign e-commerce players can only operate as marketplace facilitators and are barred from direct sales.

Proposed Policy Changes

The DGFT draft notes that less than 10% of small Indian businesses engaged in online sales cater to international buyers, primarily due to heavy compliance burdens and documentation requirements. To address this, the proposal suggests creating a third-party export facilitation model where a dedicated export entity tied to e-commerce platforms would handle compliance on behalf of sellers.

While the rules would strictly apply to exports, the draft warns of strict penalties and even criminal liability for violations. Cabinet approval will be required before the changes can be implemented.

Amazon’s Role and Pushback

Amazon has been lobbying for such reforms, especially for export operations. In December 2024, the company reported that its platform had facilitated $13 billion in cumulative Indian exports since 2015, with a target of $80 billion by 2030.

However, retail trade associations representing millions of small shopkeepers have urged the government to resist Amazon’s push, arguing that the firm’s financial resources could distort competition and threaten domestic retailers’ survival.

Broader Trade Context

The policy rethink comes as India and the US continue discussions over a long-pending trade agreement. The issue of e-commerce restrictions has often surfaced in bilateral talks, with Washington pressing for more open rules.

Meanwhile, Amazon has faced regulatory scrutiny at home. Last year, India’s antitrust watchdog accused the company of favouring certain sellers on its marketplace, charges the firm has denied.

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Conclusion

If cleared, the DGFT’s proposal could open global markets to thousands of small Indian businesses by simplifying compliance and creating export pathways through e-commerce platforms. Yet, the government faces the challenge of balancing opportunities for small exporters with concerns over the market dominance of global giants like Amazon.

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