You may host, not sell
E-commerce Business Setup in India
A foreign-invested Indian e-commerce company may operate a marketplace. It may not sell its own inventory.
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The model, not the sector, is what is restricted
Foreign investment in e-commerce is permitted for the marketplace model, where the platform connects independent sellers to buyers. It is not permitted for the inventory model, where the platform owns the goods it sells. The platform also cannot control pricing or exercise ownership over seller inventory, and there are restrictions on sales by related-party sellers. Businesses that plan a conventional online retail operation with foreign funding are planning something not permitted.
- The permitted model confirmed before you build anything
- Related-party seller restrictions explained in full
- Consumer and data obligations addressed alongside
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What is permitted
E-commerce models and foreign investment
The distinction is strictly applied.
| Model | Foreign investment position |
|---|---|
| Marketplace | Permitted; the platform connects sellers and buyers. |
| Inventory model | Not permitted for foreign-invested companies. |
| Control over pricing | Not permitted. |
| Ownership of seller inventory | Not permitted. |
| Related-party sellers | Restricted. |
| Services platforms | Assessed on the model, not the label. |
E-commerce foreign investment conditions, related-party restrictions and consumer and data protection rules are set by the authorities and change, and the distinction between models is applied in substance. Yours is checked before launch.
How it works
Setting up compliantly
Model first, because it is binding.
01
Define the model precisely
Whether you will hold inventory, set prices, or sell through related parties — because each of those determines whether foreign investment is permitted.
02
Structure the platform
Entity incorporated and the commercial arrangements with sellers structured consistently with the marketplace conditions.
03
Address the rest
Consumer protection rules for online sellers, data protection obligations, goods and services tax and logistics all set up.
- Whether the platform will own inventory
- Who sets the price to the customer
- Whether any seller is a related party
- How sellers are onboarded and paid
- Whether you provide fulfilment services
- Whether you offer warranties in your own name
- Whether private label products are contemplated
- What personal data you collect
- Expected transaction volumes
- States where you will hold stock
- Whether goods are imported
- Whether services rather than goods are sold
Scope
What is included, and what is not
Stated plainly, so nothing is added once the engagement starts.
Included in the service fee
- Model assessment against the foreign investment conditions
- Entity incorporation and registrations
- Structuring of seller arrangements consistently with the rules
- Related-party restriction guidance
- Consumer protection obligations explained
- Data protection obligations identified
- Goods and services tax registration and set up
- Guidance where the intended model is not permitted
Not included, quoted separately
- Government fees, paid at cost
- Platform and website development
- Legal drafting of seller agreements
- Payment gateway contracts
- Logistics and fulfilment
- Customs duty and clearance
- Audit and accounts preparation
- Tax advice outside India
Verify independently
Official Indian authorities
We file directly with these bodies on your behalf.
Directorate General of Foreign TradeCustoms authoritiesState pollution control boardsFood safety authorityState excise departmentsReal estate regulatory authorities
Questions
India e-commerce setup — FAQs
Can my foreign-invested company sell its own products online in India?
No. The inventory model is not permitted for foreign-invested e-commerce. You may operate a marketplace connecting independent sellers.
Can I control pricing on the platform?
No. Controlling the price at which sellers sell is inconsistent with the marketplace conditions, and the rules are applied in substance.
What about selling through a related company?
Related-party seller arrangements are restricted. Structures designed to achieve inventory selling indirectly are precisely what the restrictions target.
Does this apply to services platforms?
The model is assessed on substance. Services platforms need their own analysis rather than assuming the goods rules apply or do not.
What if my plan is not permitted?
We tell you before you build it. Discovering this after platform development and funding is considerably more expensive.
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