India: Inward/ Foreign Investment

On 23 July 2026, the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, issued Press Note No. 3 (2026 Series) a document whose brevity belies the significance of what it achieves. In a little over two pages, the Government of India has quietly dismantled one of the most longstanding restrictions in its FDI policy architecture: the blanket prohibition on foreign investment in inventory-based e-commerce. The caveat, however, is precise and deliberate: the permission is confined exclusively to exports of goods manufactured or produced in India.

On July 21, 2026, India’s central bank (i.e., Reserve Bank of India (“RBI”)) published draft Foreign Exchange Management (Foreign Investment) Rules, 2026 (“Draft Rules”). These Draft Rules will replace the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (“NDI Rules”) once notified.

India's Global Capability Centre (GCC) story has changed a great deal in recent years. What began as a way to move routine back-office and support work to India has grown into something far more strategic. GCCs today work on artificial intelligence, cybersecurity, engineering, product development, research and development, finance and analytics and increasingly sit at the heart of their parent companies' global operations.

The “Investing in India” programme is curated for existing and prospective foreign investors and their advisors to enhance their understanding of key issues when doing business in India.

The Department for Promotion of Industry and Internal Trade (“DPIIT”) issued Press Note No. 3 (2026 Series) on 23 July 2026 introducing a calibrated liberalisation to the Consolidated FDI Policy applicable to the e-commerce sector. The amendment does not overhaul the existing framework rather it carves out a narrow export-focused categories with the objective of enabling Indian manufacturers to access global markets through foreign-funded e-commerce platforms and supporting the government's broader export-promotion goals.

In a significant move to deepen foreign participation in India’s sovereign debt market, the Government of India promulgated the Income-tax (Amendment) Ordinance, 2026 on 5 June 20261, introducing a comprehensive tax exemption for eligible foreign investors investing in Government securities. Effective retrospectively from 1 April 2026, the Ordinance exempts specified income arising from Government securities from withholding tax and long-term capital gains tax, thereby addressing one of the principal tax-related barriers to foreign investment in Indian debt markets.

The Department for Promotion of Industry and Internal Trade has issued Press Note No. 3 (2026 Series), introducing a significant liberalization to India's foreign direct investment policy. This amendment permits FDI in inventory-based e-commerce entities, but exclusively for those focused on exporting goods manufactured or produced in India, marking a strategic shift in the country's exchange control framework.

The Department for Promotion of Industry and Internal Trade has issued Press Note No. 3 of the 2026 Series on 23 July 2026, marking a significant calibrated liberalisation in the foreign direct investment framework governing India’s e-commerce sector.

Expanding a business in today's global economy often involves foreign investment, overseas transactions or international collaborations. While these opportunities create significant growth potential, they also bring important regulatory responsibilities.