Govt mandates exporter registration for FDI-backed ecommerce inventory exports

New Delhi: An ecommerce company with foreign investment must register as an exporter-on-record (EOR) to hold inventory and can procure and stock goods only against confirmed export orders, the government said on Wednesday.

Speculative stockpiling for future outbound shipping will not be allowed, the commerce and industry ministry said as it notified the norms governing foreign direct investment (FDI) in inventory-based ecommerce for export purposes.

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India, last month, allowed FDI in inventory-based model of ecommerce "exclusively" for export purposes, to help increase the country's exports.

As per the notification, EOR means an entity holding a valid import export code (IEC) and Goods and Services Tax Identification Number registered with the Directorate General of Foreign Trade (DGFT) under the inventory-based cross-border ecommerce facilitation framework. EORs can buy made-in-India goods from one or more sellers-on-record for export purposes against confirmed overseas orders for exports. "By leveraging a registered EOR, Indian sellers can access overseas markets while delegating export documentation, customs formalities, destination- country regulatory compliance, product testing and certification, packaging, labelling, fulfilment, logistics and reverse logistics, to the EOR," the DGFT said.

Such operations shall be carried out through a separate legal entity incorporated for this purpose and at the time of registration or amendment as the EOR, such entity would have to disclose its shareholding pattern and the nature of its ownership or control relationship with the ecommerce entity, according to the notification.

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It said the seller will supply goods produced in India to the EOR against a confirmed export order and they will be responsible for ensuring and declaring the correct origin of goods.

It said export inventory must be distinctly identified, segregated and maintained through a digital repository ensuring complete traceability; and the export inventory cannot be diverted for sale in the domestic market.

Payment to Indian sellers will have to be made within the prescribed timeline and cannot be made contingent upon receipt of payment from overseas buyers.

The guidelines also ensure timely payment to sellers, transparency in overseas sales, and clear accountability for export compliance.