New Delhi, 24 July (H.S.): The Confederation of All India Traders (CAIT) has welcomed the government's decision to allow foreign e-commerce companies to maintain inventory in India exclusively for the export of goods manufactured or produced in the country, describing it as a progressive and forward-looking policy initiative. At the same time, the traders' body stressed the need for strong safeguards to ensure effective implementation and prevent misuse of the policy.

CAIT National General Secretary Praveen Khandelwal said on Friday that the decision is a visionary step and is in line with Prime Minister Narendra Modi's vision of increasing India's share in global trade, strengthening the country's export ecosystem, accelerating the Made in India, Made for the World campaign, and creating new opportunities for Indian manufacturers, MSMEs, artisans and entrepreneurs.

He noted that the government has permitted foreign direct investment (FDI) only in the inventory-based e-commerce model for export purposes.

Khandelwal said that while the objective of promoting exports deserves full support, it is equally important to ensure that the provision is implemented strictly in accordance with its original intent and spirit. He cautioned that it must not become a backdoor route for foreign companies to enter the domestic business-to-consumer (B2C) e-commerce market, which remains prohibited under the existing FDI policy.

To ensure transparency, accountability and effective compliance with the policy, Khandelwal proposed several safeguards.

He said that permission for foreign companies to maintain inventory for export purposes should not be granted through the automatic route. Instead, approval should be given only after the Department for Promotion of Industry and Internal Trade (DPIIT) conducts a detailed evaluation of the company's business plan and obtains a binding assurance that the inventory will be used exclusively for exports and not for domestic B2C trade.

He further suggested that export inventory owned by foreign companies should be stored only in physically segregated and customs-bonded warehouses to ensure complete traceability and prevent any diversion into the domestic market.

Khandelwal also recommended that joint inspection and audit teams comprising officials from the DPIIT and the Directorate General of Foreign Trade (DGFT) should conduct quarterly inspections to verify that the inventory is being used solely for export purposes and that no portion is diverted to domestic B2C sales.

To enhance transparency and public confidence, he proposed that the audit reports should be published every quarter on the websites of both the DPIIT and the concerned e-commerce company.

He further suggested that if any company refuses to undergo an audit, fails to provide the required records, or is found to have diverted inventory for domestic B2C sales, its approval should be cancelled with immediate effect and appropriate action should be initiated under the FDI policy and other applicable laws.

Khandelwal said these measures would help achieve the policy's core objective of boosting India's exports while preserving the integrity of the country's FDI framework and ensuring fair competition in the domestic trading ecosystem.

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Hindusthan Samachar / Jun Sarkar