To help Indian manufacturers, artisans and MSMEs reach overseas inverter the new cross-border e-commerce export framework inventory-based has been operationalised under the Foreign Trade Policy 2023 by the government. The framework enables qualifying export entities to maintain Indian goods for direct exports against confirmed orders, provided that they take up logistics, compliance and overseas marketing responsibilities.
These new regulations are complementary to the various reforms such as removal of earlier ₹10-lakh value limitation per commercial export consignment, helping small businesses send even higher-value orders through courier channels for exports.
New Export-Only Model
As per the new framework, a qualified e-commerce business could function as an Exporter-on-Record (EOR). It can buy products from Indian Sellers-on-Record (SORs) on getting confirmed overseas orders and export those goods in its own name.
This enables MSMEs to tap into a systematically structured exports route without needing the hassle of each small seller figuring out their own international warehousing, customs documentation, shipping, overseas compliance and customer returns.
The EOR is responsible for:
- Procuring goods from eligible Indian sellers.
- Managing export documentation.
- Arranging international logistics.
- Meeting destination-country requirements.
- Handling returns and rejected shipments.
- Maintaining digital records.
- Completing annual compliance certification.
Only Indian-Made Goods Eligible
The framework is applicable for goods that are made or produced in India. Export inventory must be bought from US sellers and cannot just be used to get imported or unrelated products through the export channel.
The rules seek to ensure that Indian manufacturers, artisans, traders and MSMEs capture any benefits rather than just products of foreign origin routed through India.
Eligible businesses may include:
- Handicraft manufacturers.
- Textile and apparel units.
- Jewellery and lifestyle brands.
- Home-decor producers.
- Food and packaged-product companies.
- Small engineering manufacturers.
- Beauty and personal-care brands.
- Regional consumer-product businesses.
Confirmed Orders Required
One of the main safeguards of this framework is that export inventory can be only procured against firm foreign orders. Speculative inventory cannot be built in India and then stated that it is for export by businesses at a later stage.
This is to minimize the scope of accumulation of inventories and ensure diversion and abuse of export benefits. This also brings the model closer to actual overseas demand.
This requirement may exhort e-commerce export platforms to utilize data on demand, pre-orders and sales information from an online marketplace preceding the procurement of goods from Indian sellers.
Digital Traceability
Export inventory must be distinctly identified, segregated and tracked through a digital repository. It cannot be diverted for sale in India.
Digital traceability is intended to help authorities verify:
- The seller from whom the product was purchased.
- The overseas order linked to the product.
- The export date and shipment details.
- The value and destination of the goods.
- The status of returns or rejected consignments.
- The export benefits claimed and passed through.
The system could reduce paperwork and make compliance easier to audit, but small sellers and export platforms will need accurate digital records and reliable integration with customs and logistics systems.
Timely Payment Protection
A big plus for MSMEs is the provision whereby Indian sellers must receive payment within the stipulated period irrespective of whether the overseas buyer had already made payment through EOR.
This provision can solve one of the major issues faced by small exporters — delayed cash flow. MSMEs run on thin working capital and could suffer if payment is deferred due to foreign returns, disputes over payments or a long cycle of settlement.
As a result, the EOR assumes even more accountabilities for mitigating overseas payment and customer-related risks.
Export Benefits Must Be Passed On
Export rebates and refunds must be apportioned and passed through to Indian sellers in proportion to the FOB value of their goods.
This may include benefits linked to:
- GST refunds.
- Duty drawback.
- Remission of Duties and Taxes on Exported Products.
- Other eligible export incentives.
The provision is intended to prevent intermediaries from retaining benefits that are generated by the goods supplied by MSMEs. It should also make pricing more transparent between the EOR and the Indian seller.
Return and Rejection Process
Cross-border e-commerce has traditionally faced high return rates, especially in apparel, footwear, consumer products and lifestyle categories. The new framework specifies procedures for returned or rejected consignments.
Such goods must be:
- Re-exported.
- Returned to the original Indian seller.
- Disposed of through approved procedures.
- Processed according to customs and trade requirements.
The government has also introduced a risk-based approach for returned and rejected goods, reducing the need for every shipment to face the same level of scrutiny.
Courier Export Cap Removed
Separately, the government has removed the previous ₹10-lakh limit on the value of commercial export consignments sent through courier mode.
The reform gives exporters greater flexibility to ship higher-value consignments without splitting orders or shifting them to more complex transportation and customs channels.
The change could benefit:
- Small brands receiving large overseas orders.
- High-value handicraft exporters.
- Jewellery and lifestyle businesses.
- Specialised manufacturers.
- Start-ups testing international demand.
- MSMEs selling through global marketplaces.
Removing the cap may reduce transaction costs and improve delivery speed, although exporters must still comply with product-specific customs, taxation, labelling and destination-country rules.
Simplified Return-to-Origin Mechanism
The courier reforms also introduce a legally backed Return to Origin mechanism for uncleared imports. Goods that remain unclaimed or uncleared for more than 15 days and are not prohibited, restricted or under enforcement hold may be returned through a simplified process.
This is relevant to e-commerce because international parcels can remain stuck when customers do not accept delivery, documentation is incomplete or import charges are disputed.
A predictable return process can help reduce:
- Warehouse storage costs.
- Customs delays.
- Manual intervention.
- Losses on abandoned shipments.
- Uncertainty around returned inventory.
- Delays in re-selling or re-exporting goods.
Foreign Investment Support
It comes on the heels of a revision to India’s foreign direct investment policy that allows inventory-based e-commerce only for exports of domestically manufactured goods.
The development is the only exclusion to the wider curbs on overseas investment in domestic e-commerce with inventory. This means foreign-backed platforms will be allowed to assist with export inventory and overseas fulfilment, but not permitted to deploy the model for domestic online sales.
It could also attract more capital, technology, warehousing facilities, payment systems and global marketing know-how to India’s e-commerce export space.
Benefits for MSMEs
The biggest expected benefit is easier access to global consumers. A small Indian manufacturer may have a good product but lack the resources to establish warehouses, hire customs specialists or develop independent overseas distribution.
The EOR model can provide:
- Access to global marketplaces.
- International logistics support.
- Centralised export documentation.
- Overseas customer-service infrastructure.
- Support for product returns.
- Faster market testing.
- Better visibility among foreign buyers.
- Reduced upfront export complexity.
This may enable MSMEs to focus on product quality and production while professional export entities manage the international side of the business.
Impact on Artisans and Regional Brands
Artisans and small producers from smaller towns can have a harder time reaching foreign customers. They might not have export licences and packaging or digital marketing knowhow, or full awareness of destination-country law.
E-commerce export platforms may aggregate products from several regions and showcase to global buyers with a single catalogue. This can assist the marketability of region goods and services; such as Handicrafts, Textile, Traditional Foods, Home textiles and Home Goods and Cultural products gain global exposure.
The way forward is through equitable pricing, transparent seller contracts and timely payment system however. Before signing up for an export platform, MSMEs need to evaluate commissions, return commitments, quality standards and IP clauses.
Lower Logistics Inefficiency
One of the objectives of these reforms is to cut dwell time, paperwork and transaction costs in courier-based exports. The answer is greater use of digital systems and risk-based processing, which will allow exporters to clear their goods more quickly for low-risk shipments.
It helps to make space for inventory that will move through the supply chain quickly, like products or services with a short time to delivery and those in high demand at certain times of year. It can also lower the cost of maintaining inventory in airports, courier centres and bonded warehouses.
Government intends to make larger trade processes more seamless using digital means, including a one-stop shop for approvals from many agencies.
Compliance Responsibilities
The new model does not remove compliance obligations. EORs and sellers must continue to follow Indian export laws and the rules of destination countries.
Businesses must pay attention to:
- Import restrictions in the destination market.
- Product labelling and packaging.
- Consumer-safety standards.
- Intellectual-property rights.
- GST and export documentation.
- Foreign-exchange realisation.
- Product-specific licences.
- Data and consumer-protection requirements.
- Customs valuation and classification.
The EOR will carry significant responsibility, but sellers may still face commercial consequences if their products fail quality, safety or regulatory checks.
Challenges and Limitations
The reforms may improve access, but several challenges remain:
- International shipping costs can remain high.
- Returns may still reduce seller margins.
- Product quality must be consistent.
- Overseas customer-acquisition costs can be significant.
- Destination-country taxes and duties may affect prices.
- MSMEs may depend heavily on a small number of platforms.
- Digital compliance systems may be difficult for very small sellers.
- Payment disputes and currency fluctuations can create risk.
The framework will be most effective if export platforms offer transparent contracts, predictable commissions, seller support and clear procedures for damaged, returned or rejected goods.
What MSMEs Should Do
Indian businesses interested in e-commerce exports should prepare before joining an export platform or accepting overseas orders.
Recommended steps include:
- Obtain the required export registrations and documentation.
- Confirm product classification and destination-market restrictions.
- Use export-grade packaging and accurate labelling.
- Calculate shipping, duties, platform fees and return costs.
- Maintain digital inventory and invoice records.
- Check payment and settlement timelines.
- Review the EOR agreement carefully.
- Understand who bears the cost of returns and rejected parcels.
- Protect trademarks, designs and product content.
- Start with a limited number of overseas markets before scaling.
Long-Term Significance
The e-commerce export reforms that India is exploring may support shifting of MSMEs from the occasional overseas shipment route to active in global supply chains. The new framework allows organised export, fulfilment and compliance networks to connect with Indian sellers while preserving safeguards against misuse of incentives or diversion of inventory.
The reforms will also aid in pushing forward India’s larger aim of boosting merchandise exports as well as strengthening the competitiveness of small enterprises. The government also has indicated that MSME exporters often face various issues — including with customs, banking, payments and documentation — which would be resolved through simplified provisions in place from the E-Commerce Exports Handbook.
Conclusion
Created to enhance the ease of doing business for Indian MSMEs, artisans and start-ups selling products overseas, the new e-commerce export framework, as well as the removal of ₹10-lakh courier-export cap also comes into force today. New draft rules would also mandate pass-through of all export incentives, timely payments and digital traceability, while allowing exporters to facilitate inventory management, logistics and returns overseas for Indian sellers.
Reforms may make international selling less costly and cumbersome, but they will rely on reliable logistics, clear platform behavior, strong enforcement of digital regulations and a rigorous approach to product quality. The changes represent a real opportunity for MSMEs to test and ramp up global demand without having to develop an entire export infrastructure by themselves.