E-commerce & D2C in India
E-commerce & D2C Company Registration in India: FDI Rules & GST
India's e-commerce rules are built around one core distinction — whether your business owns the inventory it sells or simply facilitates sales between third-party sellers and buyers. Get that distinction right and the rest of the structuring follows; get it wrong and you can find your intended model is not actually open to foreign investment. This guide covers what is allowed, what changed in 2026, and how to register the entity that fits your model.
Quick answer
Can a foreign-owned e-commerce company sell directly to Indian consumers?
Not under the inventory-based model. India allows 100% FDI under the automatic route only for the marketplace model, where the platform facilitates sales between independent sellers and buyers without owning the inventory. A 2026 exception (Press Note 3 of 2026) also permits FDI in inventory-based e-commerce, but only for exporting Indian-origin goods — not domestic retail.
Marketplace model vs inventory-based model
India has permitted 100% FDI under the automatic route in the marketplace model of e-commerce since 2016 — where the platform operates purely as an information technology facilitator between buyers and independent third-party sellers, without owning or controlling the inventory listed on it. The government has, at the same time, retained its restriction on FDI in the inventory-based model for domestic retail: a foreign-funded entity that owns inventory and sells it directly to Indian consumers cannot do so under the standard FDI framework. This distinction — facilitator versus owner-seller — is the single most important structuring question for any foreign e-commerce or D2C brand entering India.
The 2026 export-oriented exception
On 23 July 2026, the government issued Press Note 3 of 2026, carving out a limited but genuinely new permission: FDI in e-commerce entities holding inventory of Indian-origin goods, provided the entity is exclusively undertaking exports and the goods are manufactured or produced in India. This does not reopen FDI in inventory-based domestic retail — the relaxation is confined strictly to export-oriented operations — but it is a meaningful new route for foreign brands that want to source and export from India through an Indian-owned-inventory structure rather than through a pure marketplace.
GST TCS obligations for marketplace operators
Under Section 52 of the CGST Act, any e-commerce operator must collect Tax Collected at Source on the net value of taxable supplies made through its platform by registered sellers — currently 0.5% (0.25% CGST + 0.25% SGST on intra-state supplies, or 0.5% IGST on inter-state supplies) — and file it monthly via GSTR-8 by the 10th of the following month. Sellers can offset the TCS collected on their behalf against their own GST liability or claim a refund. Separately, anyone selling goods through an e-commerce operator must register for GST regardless of turnover — the small-supplier registration exemption available to offline businesses does not apply to e-commerce sales.
Choosing your entity
Most foreign e-commerce and D2C businesses incorporate a Private Limited Company as a Wholly Owned Subsidiary, since it is taxed as a domestic Indian entity, can raise equity funding and issue employee stock options, and cleanly separates Indian operations and liability from the parent company. The subsidiary then structures its actual India business under whichever FDI route — marketplace-model automatic, or the narrower 2026 export-oriented inventory route — matches how it genuinely operates.
Incorporation process
The core incorporation sequence — DSC and DIN issuance, name reservation via SPICe+ Part A, drafting your MOA and AOA, and SPICe+ Part B filing — is the same for an e-commerce company as for any Indian private limited company. See our step-by-step incorporation guide for the full walkthrough, and our guide to FLA Return and transfer pricing compliance for the annual filings that follow for a foreign-owned subsidiary.
Planning an India subsidiary for a US e-commerce business?
The general FDI and GST rules are only one part of the setup. US parents also need to map the importer of record, inventory ownership, customer contracts, payment flows and any services or charges between the US parent and Indian entity. Read our US e-commerce subsidiary setup guidefor that cross-border planning checklist.
FAQs: e-commerce & D2C company registration in India
Can a foreign-owned e-commerce company sell directly to Indian consumers? Not under the inventory-based model. India permits 100% FDI under the automatic route only for the marketplace model of e-commerce, where the platform is a technology facilitator connecting third-party sellers to buyers and does not own the inventory it lists. A foreign-funded entity that owns inventory and sells it directly to Indian consumers (the inventory-based B2C model) remains restricted for domestic retail sales.
What is the 2026 export-oriented e-commerce exception? Press Note 3 of 2026 introduced a narrow carve-out permitting FDI in inventory-based e-commerce entities, but only where the goods are manufactured or produced in India and the entity is exclusively undertaking exports. The relaxation does not extend to any domestic retail sale — it applies solely to export-oriented operations.
Do e-commerce operators have to collect GST TCS on seller transactions? Yes. Under Section 52 of the CGST Act, every e-commerce operator must collect Tax Collected at Source on the net value of taxable supplies made through its platform by registered sellers, currently at 0.5% (split 0.25% CGST + 0.25% SGST for intra-state supplies, or 0.5% IGST for inter-state supplies), and file it monthly via GSTR-8 by the 10th of the following month.
What entity structure should a foreign D2C brand use to enter India? Most foreign D2C and marketplace businesses incorporate a Private Limited Company as a Wholly Owned Subsidiary, since it is taxed as a domestic Indian entity, can raise funding and issue ESOPs, and cleanly separates Indian operations and liability from the parent. The subsidiary then operates under whichever FDI route (marketplace-model automatic, or the narrower export-oriented inventory route) matches its actual business model.
Does GST registration work differently for online sellers than offline businesses? Yes — unlike offline businesses, which benefit from state-wise GST registration thresholds, anyone selling goods through an e-commerce operator in India must register for GST regardless of turnover, since the mandatory-registration threshold exemption for small suppliers does not apply to e-commerce sales.
How much does it cost to register an e-commerce company in India? The MCA government filing fee for the SPICe+ incorporation form itself is nil for authorised capital up to ₹15 lakh, under Schedule I of the Companies (Registration Offices and Fees) Rules, 2014 — which covers most D2C and marketplace startups outright. What you actually pay is state stamp duty, which varies by which Indian state you register your office in, plus professional fees. We quote a fixed total once we know your structure and registered office state.
Next step
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