By Vikrant Rana and Apalka Bareja
Notification No. 27/2026-27, dated August 5, 2026, Directorate General of Foreign Trade | Amendment to the Foreign Trade Policy, 2023
INTRODUCTION
The Directorate General of Foreign Trade (“DGFT”), Department of Commerce, Ministry of Commerce & Industry, has issued Notification No. 27/2026-27 dated August 5, 2026 (the “Notification”)[1] , amending the Foreign Trade Policy, 2023 (“FTP”)[2] to introduce the Inventory-based Cross-border E-Commerce Facilitation Framework (the “Framework”). The Notification has been issued under Section 5 of the Foreign Trade (Development & Regulation) Act, 1992[3] , read with Paragraph 1.02 of the FTP, with immediate effect, and has the approval of the Ministry of Commerce & Industry.
This Notification inserts the substantive provisions of the Framework — Paragraphs 9.13 to 9.19 of the FTP — comprising definitions, the objective of the Framework, eligibility conditions for holding Export Inventory, inventory management and segregation requirements, payment and Export Rebates and Refunds mechanics, reverse logistics obligations, and utilisation of E-Commerce Export Hubs. This follows Public Notice No. 25/2026-27[4] , also dated August 5, 2026, which separately notified the operational and registration procedures under the Handbook of Procedures, 2023[5] , together with Aayaat Niryaat Form (ANF) 9A for registration of Exporters-on-Record — covered in our earlier alert on this subject.
BACKGROUND
While Public Notice No. 25/2026-27 operationalised the procedural aspects of the Framework (registration, seller visibility, compliance certification, and dispute resolution), the present Notification supplies the underlying legal architecture by amending the FTP itself. It defines the key actors and concepts — Exporter-on-Record, Seller-on-Record, Export Inventory, Domestic Inventory, and Export Rebates and Refunds — and sets out the eligibility conditions, title-passage mechanics, and payment obligations that govern the Framework.
Both instruments bear the same file reference [F. No. 01/89/180/23/AM-25/PC-9-Part-(2)] and the same date, and are evidently part of a single coordinated rollout of the Framework by DGFT.
KEY REGULATORY REQUIREMENTS
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Definitions (Paragraph 9.13)
- “Exporter-on-Record (EOR)” means an entity holding a valid IEC and GSTIN, registered with DGFT under the Framework, exporting and selling goods procured from one or more Sellers-on-Record to buyers located outside India. Where an e-commerce entity proposes to undertake export operations under Para 5.2.15.2.5 of the Consolidated FDI Policy, as amended vide Press Note No. 3 (2026 Series) dated July 23, 2026, such operations must be carried out through a separate legal entity incorporated for this purpose, and such entity must disclose its shareholding pattern and the nature of its ownership or control relationship with the e-commerce entity at the time of registration or amendment as EOR.
- “Seller-on-Record (SOR)” means an entity registered in India under applicable GST law, supplying goods produced in India to the Exporter-on-Record against the Exporter-on-Record’s confirmed export orders, for export to buyers located outside India.
- “Export Inventory” means goods procured by the Exporter-on-Record from a Seller-on-Record against a confirmed export order and held exclusively for export, designated, recorded, and traceable in the Exporter-on-Record’s records as export-designated stock.
- “Domestic Inventory” means goods held by the Seller-on-Record for supply in the Domestic Tariff Area (DTA).
- “Export Rebates and Refunds (ERR)” means cash or cash-equivalent export incentives, rebates, refunds, or remissions received by the Exporter-on-Record upon export of goods, including Duty Drawback, RoDTEP, RoSCTL, or any other notified scheme involving a direct monetary or transferable financial benefit. ERR excludes non-transferrable duty remission instruments such as Advance Authorisation or EPCG Authorisation. Refund of taxes to the Exporter-on-Record under the CGST Act is an Exporter-on-Record entitlement and does not form part of Seller-attributable ERR.
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Objective of the Framework (Paragraph 9.14)
The Framework is intended to enable e-commerce exports through an inventory model under which the Exporter-on-Record holds inventory for export, undertakes export-related processes, exports goods, and assists and enables Sellers-on-Record to access global markets.
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Eligibility and Conditions for Holding of Export Inventory (Paragraph 9.15)
- An e-commerce entity, other than a marketplace e-commerce entity as defined under the Consolidated FDI Policy, may undertake export-only inventory operations through an Exporter-on-Record registered under the Framework. Such Exporter-on-Record may hold inventory exclusively for export through e-commerce and undertake all export-related activities, subject to the Framework and the Consolidated FDI Policy, as in force from time to time.
- Only goods of Indian origin are eligible under the Framework. The Seller-on-Record is responsible for ensuring and declaring the correct origin of goods in accordance with applicable laws and the relevant origin criteria.
- A list of ineligible goods may be notified by DGFT from time to time.
- Title to goods passes from the Seller-on-Record to the Exporter-on-Record only against a confirmed export order received by the Exporter-on-Record from a buyer located outside India. Speculative transfer of title or inventory build-up without a confirmed export order is not permitted under the Framework.
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Export Inventory Management and Segregation (Paragraph 9.16)
The Exporter-on-Record is responsible for distinctly identifying, segregating, and maintaining Export Inventory, and for maintaining a digital repository enabling identification, tracking, and traceability of all Export Inventory, including records relating to procurement from the Seller-on-Record, inventory status, and linkage with export documentation. The manner, form, and standards for identification, segregation, and maintenance of Export Inventory, and for the digital repository, are to be prescribed under the Handbook of Procedures.
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Payment to the Seller-on-Record and Export Rebates and Refunds (Paragraph 9.17)
- The Exporter-on-Record must pay the Seller-on-Record promptly upon acceptance or deemed acceptance of the goods, and in any event no later than 7 days from the date of such acceptance or deemed acceptance. This payment cannot be made contingent upon, or delayed on account of, receipt of payment from the buyer outside India, return of goods by the buyer outside India, or any other event outside the Seller-on-Record’s control.
- The Exporter-on-Record is entitled to claim ERR in accordance with the provisions of the FTP and relevant notifications.
- The Exporter-on-Record must apportion and disburse ERR among the Sellers-on-Record whose goods form part of the Export Consignment, in proportion to the Free-on-Board (FOB) value attributable to the goods of each such Seller-on-Record as declared in the Shipping Bill for that Export Consignment.
- The Exporter-on-Record may retain an administrative charge from the ERR; the balance, after deduction of such charge, constitutes the Seller-attributable Export Benefits and must be disbursed to the Seller-on-Record.
- The pass-through obligation for apportionment of ERR becomes operative in respect of an Export Consignment only once the Exporter-on-Record has actually claimed ERR in respect of that consignment.
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Reverse Logistics and Returned Consignments (Paragraph 9.18)
- The Exporter-on-Record shall own and manage all reverse logistics processes for returned or rejected consignments.
- Returned or rejected consignments shall not, under any circumstances, be sold or supplied in the domestic market by the Exporter-on-Record, whether directly or through any other person or entity.
- The costs associated with reverse logistics shall be borne by the Exporter-on-Record.
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Utilisation of E-Commerce Export Hubs (Paragraph 9.19)
The Exporter-on-Record must, to the extent practicable, utilise notified E-Commerce Export Hub (ECEH) infrastructure for operations under the Framework, subject to the operational readiness and available capacity of such facilities.
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Effect of the Notification
The Notification introduces the Inventory-based Cross-border E-Commerce Facilitation Framework, enabling export-only inventory operations through registered Exporters-on-Record in accordance with the Consolidated FDI Policy, and prescribes the eligibility conditions, operational obligations, inventory management requirements, and other operational requirements applicable to such operations.
ANALYSIS
For E-Commerce Entities and Exporters-on-Record
The Notification clarifies that the inventory-based export model under this Framework is available only to e-commerce entities that are not “marketplace e-commerce entities” under the Consolidated FDI Policy, and only for export-only inventory operations — a distinction that will be central to determining which e-commerce entities may participate. Where an e-commerce entity itself proposes to undertake such export operations under Para 5.2.15.2.5 of the Consolidated FDI Policy (as amended by Press Note No. 3 (2026 Series) dated July 23, 2026), it must do so through a separate legal entity incorporated for the purpose, and must disclose its shareholding pattern and the nature of its ownership or control relationship with the e-commerce entity — both at initial registration and on any subsequent amendment. This aligns with, and gives further texture to, the FDI and e-commerce entity disclosures already sought under ANF-9A (as covered in Part I of this series). Exporters-on-Record should also note the strict title-passage rule under Paragraph 9.15(iv): title can pass only against a confirmed export order received by Exporter-on-Record, and speculative inventory build-up is expressly barred — a meaningful operational constraint on how Export Inventory may be sourced and held. Equally important is the 7-day, non-contingent payment obligation to Sellers-on-Record under Paragraph 9.17(i), which is a stricter and separate timeline from the 30-day period (under the Public Notice) within which Seller-attributable Export Benefits sourced from actual Export Rebates and Refunds must be disbursed.
For Sellers-on-Record
Sellers-on-Record gain a clear statutory basis for prompt, non-contingent payment — due no later than 7 days from acceptance or deemed acceptance of goods, and expressly insulated from delays caused by the buyer outside India or other events beyond the Seller-on-Record’s control. The Framework also entitles Sellers-on-Record to a defined share of Export Rebates and Refunds, apportioned by FOB value declared in the Shipping Bill, net only of the Exporter-on-Record’s administrative charge, and payable only once the Exporter-on-Record has actually claimed the relevant ERR. Sellers-on-Record should also note the absolute prohibition on their returned or rejected consignments being diverted to the domestic market by the Exporter-on-Record, and that responsibility (and cost) for reverse logistics rests entirely with the Exporter-on-Record. At the same time, Sellers-on-Record bear responsibility for correctly declaring the Indian origin of goods, which is a precondition for eligibility under the Framework.
CONCLUSION
Read together, Notification No. 27/2026-27 and Public Notice No. 25/2026-27 constitute a complete first rollout of the Inventory-based Cross-border E-Commerce Facilitation Framework — the former inserting the substantive FTP provisions and definitions, the latter operationalising registration and compliance procedures. E-commerce entities structuring export-only inventory operations, prospective Exporters-on-Record, and Sellers-on-Record engaging with such entities are advised to assess their proposed structures against the eligibility conditions, disclosure requirements, and payment timelines introduced under this Notification, particularly the interplay with the Consolidated FDI Policy and Press Note No. 3 (2026 Series).[6]
For further information or assistance in relation to the Inventory-Based Cross-Border E-Commerce Facilitation Framework, please reach out to S.S. Rana & Co.
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[2] https://www.dgft.gov.in/CP/?opt=ft-policy
[3] https://www.indiacode.nic.in/bitstream/123456789/1947/1/A1992-22.pdf
[5] https://www.dgft.gov.in/CP/?opt=ft-procedures
[6] https://www.dpiit.gov.in/static/uploads/2026/07/ceb0cae74fd4e83094dc6b50c3d53f92.pdf