The Centre’s decision to relax foreign direct investment (FDI) rules for inventory-based e-commerce exports has exposed a divide within India’s trading ecosystem. While exporters in manufacturing hubs such as Tiruppur and Surat see the move as an opportunity to access global markets more efficiently, distributors and trader bodies fear it could strengthen the bargaining power of large marketplaces, encourage predatory pricing and create loopholes for domestic market distortions.
The All India Consumer Products Distributors Federation (AICPDF), which represents distributors across the country, has strongly opposed the relaxation.
“The inventory sourced for exports could be rerouted to the domestic market. There have to be strong guardrails to ensure it does not happen,” said AICPDF national president Dhairyashil Patil. “Given the might of marketplaces, they could also discount goods being sourced for exports. Small exporters may have no option but to comply because of the promise of access to international markets.”
Patil said the federation had opposed the proposal when it was under consideration and continues to object following the DPIIT press note issued on Thursday, arguing that the policy lacks safeguards against misuse.
Market Distortions
Industry experts, however, believe competitive market dynamics could prevent platforms from excessively squeezing supplier margins. Naveen Malpani, partner and retail & e-commerce industry leader at Grant Thornton Bharat, said export markets typically offer better realisations than domestic sales, reducing the incentive to aggressively push down procurement prices.
“International markets generally provide higher per-unit recoveries than India, where competition is far more intense,” he said. “As more global players enter under the new framework, suppliers could also have multiple platform options rather than dealing with a single buyer.”
Even so, many small businesses say their concerns extend beyond pricing.
Operational Challenges for MSMEs
Ahmedabad-based entrepreneur Chaitali Shah, founder of sustainable fashion label MODE BY SHRADDHA, said e-commerce exports can significantly boost sales but also expose businesses to design theft and counterfeiting.
“A lot of effort goes into creating these designs. Artisans and creators work hard, and once products are displayed online, designs can easily be copied,” Shah said. She prefers promoting products through her own website and believes artisans should be able to sell directly to global marketplaces without cumbersome onboarding processes.
She also cited operational hurdles, including stringent onboarding requirements and liberal return policies that hurt sellers.
In Surat, garment manufacturers broadly welcomed the policy but said smaller enterprises would need handholding to benefit. “Many small manufacturers sdon’t have the capability to access these platforms on their own,” said a garment merchant, adding that training and compliance support would be essential.
Jewellery manufacturer Prashant Chokshi from Vadodara said the policy could expand overseas sales but may disproportionately benefit businesses with stronger working capital. “Small manufacturers largely operate on an order basis and cannot afford to maintain inventory,” he said.
“The new policy of the Government allowing FDI for inventory-based B2C sales for exports makes sense when one considers that it will increase exports. However, inventory-based B2C model may force small jewellers to go through platforms such as Amazon only, with price opacity in terms of sales to end consumers,” said Kirit Bhansali, chairman, Gem and Jewellery Export Promotion Council India.
For exporters in Tiruppur, India’s largest knitwear cluster, the policy could revive interest in cross-border e-commerce. V.G. Sivaraj, founder of apparel brand Espresso, was among the early adopters of Amazon’s Global Selling programme in 2015, scaling exports to around 100 orders a day before exiting because managing logistics and overseas operations became difficult for a sole entrepreneur.
A. Sakthivel, chairman of the Apparel Export Promotion Council (AEPC), said the relaxation would attract more exporters to explore e-commerce exports. “We currently do very negligible business through e-commerce. This move will encourage more global platforms to source from clusters like Tiruppur,” he said.
Experts say the policy could help Tiruppur, which is targeting knitwear exports of Rs 1 lakh crore by 2030, up from more than Rs 46,000 crore in FY26. But traders say the policy’s success will ultimately depend on detailed operating guidelines that balance export growth with safeguards against market distortions and unfair platform practices.