By Naraway
In this article
Indians bought US$65-66 billion of goods online in 2025, up about a fifth on the year, according to the Bain & Company and Flipkart report How India Shops Online 2026. About one rupee in six went through quick commerce, the 10-to-30-minute delivery apps where India now leads most of the world, China included.
For a company with foreign shareholders, the size of that market comes with one structural rule that has shaped Indian e-commerce for a decade.
Marketplace Yes, Inventory No
Marketplace model
The platform connects independent sellers with buyers and does not own the goods. Open to 100% FDI on the automatic route.
Inventory model
The platform owns the stock and sells it to consumers. Closed to FDI for sales in India.
The rule is why India's largest foreign-backed platforms present themselves as marketplaces, and why the relationship between a marketplace and its largest sellers has drawn scrutiny for years. Commentators have long argued about how far the line can stretch.
The July 2026 Exception
Press Note 3 of 2026, dated 23 July 2026, inserted paragraph 5.2.15.2.5 into the FDI policy. A foreign-owned e-commerce entity may now hold inventory, but only to export goods manufactured or produced in India. Domestic inventory-based retail remains closed. Lawyers have flagged one open question: whether a single entity can run a domestic marketplace alongside export inventory, or needs two.
Where the Growth Is
Quick commerce delivered about US$10-11 billion of GMV in 2025 and has roughly doubled each year for two years. Bain expects e-retail overall to grow above 20% a year to 2030. Only about 30% of Indian internet users shop online today, against 1.11 billion internet subscriptions, which is where most of the remaining growth sits.
Part of Naraway's research series India Market Entry in 2026.
In short
India's e-retail market reached US$65-66 billion of gross merchandise value in 2025, growing 19-21%, with quick commerce at about 16-17% of it, according to Bain & Company and Flipkart. Under India's FDI policy, foreign-owned companies may run marketplace e-commerce with up to 100% foreign investment on the automatic route, but may not run inventory-based e-commerce, in which the platform owns the goods it sells to consumers. Press Note 3 of 2026, dated 23 July 2026, created one exception: inventory-based e-commerce solely for exporting goods made in India.
- E-retail GMV: US$65-66 billion in 2025, up 19-21%; projected US$170-180 billion by 2030.
- Quick commerce: about 16-17% of e-commerce GMV in 2025.
- Marketplace model: up to 100% FDI, automatic route.
- Inventory model (selling own stock to Indian consumers): closed to FDI.
- Since 23 July 2026: inventory model allowed for exports of goods made in India.
Sources
- India e-retail sector crosses $65 bn; likely to grow over 20% annually till 2030, IANS
- How India Shops Online, Bain & Company
- DPIIT permits foreign investment in export-oriented inventory-based e-commerce model, EY
- DPIIT relaxes FDI norms for export-oriented inventory-based e-commerce, Bar & Bench
- FDI e-commerce guidelines: a reflection of loopholes and repercussions, NLIU Centre for Business and Commercial Laws
Frequently Asked Questions
Is FDI allowed in e-commerce in India?
Yes, up to 100% on the automatic route for the marketplace model. FDI is not allowed in the inventory-based model for sales to Indian consumers.
What is the difference between marketplace and inventory e-commerce?
A marketplace provides a platform where independent sellers sell to buyers. In the inventory model, the e-commerce company owns the goods and sells them itself.
What did Press Note 3 of 2026 change?
It added paragraph 5.2.15.2.5 to the FDI policy, allowing a foreign-owned e-commerce entity to run an inventory-based model solely for exporting goods manufactured or produced in India.
How big is e-commerce in India?
E-retail GMV was US$65-66 billion in 2025 and is projected at US$170-180 billion by 2030, according to Bain & Company and Flipkart.
How big is quick commerce in India?
About 16-17% of e-commerce GMV in 2025, roughly US$10-11 billion.
