What corporate legal services does Corporate Legit provide?

Corporate Legit offers India Entry Services, International Taxation, Direct & Indirect Taxation, Secretarial & Corporate Legal Compliances, Foreign Direct Investment, Intellectual Property Rights, Licensing and Registration, company registration services, Merger and Amalgamation (M&A), Litigation, Virtual CFO Services, International Advisory, Audit Services, and Registration of NGOs.

What India Entry Services do you offer?

India Entry Services helps foreign companies establish operations in India. The service assists with business structuring, necessary approvals, and compliance requirements for foreign businesses seeking to enter the Indian market.

What does your Corporate Secretarial practice cover?

Our Corporate Secretarial practice handles statutory compliance requirements for companies operating in India, including corporate legal documentation, board meeting management, and regulatory filings.

What are your Corporate Restructuring services?

Corporate Legit’s restructuring services include mergers and acquisitions, demergers, and corporate restructuring activities in accordance with regulatory requirements.

What Intellectual Property services do you provide?

We provide trademark search and registration services in IP databases, along with other intellectual property protection services, to safeguard clients’ IP rights in India.

How does Corporate Legit handle taxation matters?

Our taxation practice provides advice under Direct & Indirect Taxation, including income tax planning, GST compliance, double taxation avoidance advisory, and international taxation matters, to ensure clients remain compliant with Indian tax laws

What Registration & Licensing Services do you offer?

Corporate Legit provides registration and licensing services to help businesses obtain the necessary operational permits and registrations to conduct business legally in India.

What are your Regulatory Compliance & Audit Services?

We provide Corporate Compliance services to help businesses meet their statutory obligations and remain compliant with Indian regulatory requirements, along with supporting them through audit services in India whenever needed.

Do you provide Virtual CFO Services?

Yes, Corporate Legit offers Virtual CFO services for businesses requiring financial management expertise without a full-time Chief Financial Officer.

What makes Corporate Legit’s team qualified?

The senior members of the Firm possess professional qualifications in law, accountancy, company secretarial practices and management with international class experience from working with world-class advisory firms, including Big-4 accounting firms and international law firms.

Do you assist with NGO registration?

Yes, Corporate Legit provides Registration of NGOs (Non-Government Organisation) services to help establish non-profit entities in India.

How can businesses contact Corporate Legit?

Businesses can contact Corporate Legit at +91 9990607535, email at office@thecorporatelegit.com, or visit the office at A-77, Second Floor, Sector-4, Noida 201301, New Delhi NCR, India.

E-commerce company Registration in India: FDI & Rules

April 22, 2026
Sachin Aggrawal
FDI
0

E-commerce Company Registration in India: FDI Rules, Restrictions, and Compliance Steps

Introduction

India’s e-commerce market is one of the fastest-growing in the world. It crossed USD 70 billion in 2023 and is projected to reach USD 300 billion by 2030. For foreign investors, this growth is attractive. But E-commerce company registration in India sits in one of the most tightly regulated sectors for foreign investment, with clear lines drawn between what is permitted and what is not.
The single most important thing a foreign company needs to understand before entering India’s e-commerce space is the distinction between the marketplace model and the inventory-based model. Everything else flows from that. Get this classification wrong at the entry stage, and the entire structure is non-compliant, regardless of how cleanly the incorporation is done.

What Are the Two E-commerce Models Under India’s FDI Policy?

India’s FDI policy recognises two distinct e-commerce models, and the rules for each are completely different. 100% FDI under the Automatic Route is permitted for the marketplace model. FDI is entirely prohibited for the inventory-based model.

Marketplace Model

The e-commerce platform acts purely as a facilitator between buyers and sellers. It provides the technology infrastructure, payment processing, and logistics support, but does not own the goods being sold. Sellers are independent entities listing their products on the platform. Amazon India and Flipkart operate under this model, at least in their declared FDI-compliant structure.

Inventory-Based Model

The e-commerce company owns the goods being sold and sells them directly to consumers. This model is prohibited for foreign investment under India’s current FDI policy. A foreign company cannot set up an e-commerce platform in India that purchases inventory and resells it to end consumers.
The line between these two models is not always clear in practice, and this is exactly where enforcement action has occurred. DPIIT and CCI have examined structures where marketplace platforms maintained indirect control over inventory through related seller entities or group companies. If a marketplace entity controls or influences the inventory of a vendor, the business is treated as an inventory-based model, and the FDI becomes non-compliant.

What Are the Key FDI Restrictions for E-commerce Company Registration in India?

Beyond the marketplace versus inventory distinction, E-commerce company registration in India with foreign investment comes with four specific operational restrictions that apply to marketplace entities.

No influence on pricing

A marketplace entity cannot directly or indirectly influence the sale price of goods or services listed on its platform. Offering discounts funded by the marketplace company, or structuring arrangements that effectively result in price fixing, violates this condition.

No exclusive arrangements

Marketplace platforms cannot mandate or enter into exclusive selling arrangements with any specific vendor or seller group. A seller on one marketplace can freely sell on other platforms.

No inventory control through related parties

If 25% or more of the purchases of a vendor are from the marketplace entity or its group companies, that vendor will be treated as a related party. The inventory of a vendor controlled by the marketplace or its group companies makes the model inventory-based, not marketplace-based.

Level playing field

Marketplace entities must ensure that all sellers have access to the same services, including warehousing, logistics, and payments, on the same terms.

Land-bordering country restriction (Press Note 3 of 2020)

A critical restriction that many foreign e-commerce investors overlook. Under Press Note 3 of 2020, FDI from entities located in countries that share a land border with India, primarily China, requires prior Government approval before investment is made. This is not sector-specific; it applies across all sectors, including e-commerce. Chinese-origin investment into Indian e-commerce entities, regardless of whether it is routed through a third country, requires DPIIT and Ministry of Home Affairs clearance. This restriction remains fully in force as of 2025.

What Is the Step-by-Step Process for E-commerce Company Registration in India?

E-commerce company registration in India follows the standard Companies Act incorporation process, followed by e-commerce-specific registrations and compliance steps.

Step 1: Incorporate a Private Limited Company

A Private Limited Company is the only appropriate structure for a foreign-invested e-commerce platform in India. It allows 100% FDI under the Automatic Route for the marketplace model, supports equity fundraising, and creates a legally distinct entity from the foreign parent.
The MoA objects clause must specifically describe the marketplace e-commerce activities the company will undertake. A generic objects clause causes problems during GST registration, payment gateway tie-ups, and regulatory reviews.

Documents required for incorporation:

SPICe+ filing on the MCA portal covering incorporation, DIN, PAN, TAN, EPFO, and ESIC
MoA and AoA, DIR-2, INC-9
DSC for all directors
Registered office documents, including NOC, utility bill, and lease deed

Note: Documents for foreign directors must be notarised and apostilled or consularised by the competent authority. This is not required if the foreign director signs in India on a valid Business Visa.

Step 2: File INC-20A and Open Bank Account

Before the e-commerce company begins any operations, Form INC-20A must be filed with the RoC within 180 days of incorporation, confirming receipt of share capital. No business can commence without this filing.

Step 3: FEMA Compliance After Receiving FDI

Post-investment, Form FC-GPR must be filed on RBI’s FIRMS portal within 30 days of allotting shares to the foreign investor. Required documents include the FIRC, KYC of the foreign investor, a valuation certificate from a SEBI-registered Merchant Banker or CA, and a Board Resolution approving the allotment.

Step 4: GST Registration

GST registration is mandatory for e-commerce operators regardless of the turnover threshold. Under Section 24 of the CGST Act, 2017, e-commerce operators who are required to collect Tax Collected at Source (TCS) must mandatorily register for GST. The TCS rate applicable to e-commerce operators is 1% (0.5% CGST plus 0.5% SGST, or 1% IGST for inter-state supplies) on the net value of taxable supplies made through the platform.

Step 5: Information Technology Act Compliance

E-commerce platforms in India must comply with the Information Technology Act, 2000, and the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. Obligations include:

Publishing terms of use, privacy policy, and grievance redressal policy on the platform
Appointing a Grievance Officer who is a resident of India and disclosing their name and contact details
Acknowledging user complaints within 24 hours and resolving them within 15 days
Significant social media intermediaries (over 5 million users) have additional compliance requirements, including a Chief Compliance Officer, a Nodal Contact Person, and a Resident Grievance Officer

Step 6: Consumer Protection (E-Commerce) Rules, 2020

All e-commerce entities operating in India must comply with the Consumer Protection (E-Commerce) Rules, 2020. Key obligations include displaying seller information, country of origin of goods, estimated delivery timelines, refund and return policies, and a mandatory grievance redressal mechanism. These rules apply to both domestic and foreign e-commerce entities selling to Indian consumers.

What Are the Annual Compliance Requirements for an E-commerce Company in India?

Once operational, an e-commerce company registered in India carries both standard corporate compliance obligations and e-commerce-specific regulatory filings.

Compliance	Form	Due Date
Annual Financial Statements	AOC-4	Within 30 days of AGM
Annual Return	MGT-7	Within 60 days of AGM
Income Tax Return	ITR-6	October 31 (with audit)
GST Annual Return	GSTR-9	December 31
TCS Return (e-commerce operators)	GSTR-8	10th of the following month
FLA Return (if FDI received)	FLA	July 15 annually
Director KYC	DIR-3 KYC	September 30 annually

The GSTR-8 is specific to e-commerce operators and is separate from the standard GST returns. It reports the supplies made through the platform and the TCS collected. Missing GSTR-8 filings is a common compliance failure for e-commerce companies, particularly those that do not realise the filing obligation starts from the first month of operations, regardless of transaction volume.

Conclusion

E-commerce company registration in India with foreign investment is entirely viable for marketplace model platforms, but requires precise structural planning before any investment is made. The marketplace versus inventory distinction must be reflected not just in the legal documents but in the actual operational architecture of the platform. Seller agreements, logistics arrangements, pricing policies, and related-party vendor relationships all need to be designed with the FDI conditions in mind from day one.

CorporateLegit assists foreign companies with E-commerce company registration in India, covering FDI route assessment, marketplace model structuring, incorporation, FEMA compliance, GST registration, IT Act compliance setup, and ongoing annual filings. If you are planning to set up an e-commerce operation in India and want the structure built correctly before the first investment is made, reach out to CorporateLegit.

FAQ

1. Is 100% FDI allowed for E-commerce company registration in India? 100% FDI under the Automatic Route is permitted only for the marketplace model of e-commerce, where the platform facilitates transactions between buyers and sellers without owning the goods. FDI is entirely prohibited for the inventory-based model, where the e-commerce company owns and sells goods directly to consumers.

2. What is the difference between the marketplace model and the inventory-based model? In the marketplace model, the platform connects independent sellers with buyers and does not own the goods being sold. In the inventory-based model, the e-commerce company purchases goods and sells them directly to consumers. Only the marketplace model is eligible for foreign investment in India.

3. Does Press Note 3 of 2020 affect Chinese investment in Indian e-commerce? Yes. Under Press Note 3 of 2020, FDI from entities in countries sharing a land border with India, including China, requires prior Government approval from DPIIT and the Ministry of Home Affairs before the investment is made. This applies to all sectors including e-commerce and remains in force as of 2025.

4. Is GST registration mandatory for E-commerce company registration in India? Yes. Under Section 24 of the CGST Act, 2017, e-commerce operators who collect TCS are mandatorily required to register for GST regardless of turnover. The TCS rate is 1% on the net value of taxable supplies made through the platform, reported monthly through GSTR-8.

5. What IT Act compliance does an e-commerce platform need in India? E-commerce platforms must comply with the IT Act, 2000 and the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. This includes publishing a grievance policy, appointing a resident Grievance Officer, acknowledging complaints within 24 hours, and resolving them within 15 days. Platforms with over 5 million users have additional compliance obligations.

6. Can a foreign e-commerce company sell directly to Indian consumers without setting up an Indian entity? Cross-border e-commerce selling to Indian consumers from overseas warehouses is not regulated under India’s FDI policy since no Indian entity is involved. However, such sales are subject to import duties, GST on imports, and consumer protection obligations under the Consumer Protection (E-Commerce) Rules, 2020, which apply to all e-commerce entities serving Indian consumers regardless of where they are incorporated.