India Entry for E-commerce Companies

Marketplace versus inventory model

As we understand the FDI policy, foreign investment up to 100% is permitted in a marketplace e-commerce entity, which provides a platform connecting buyers and sellers. Foreign investment in inventory-based e-commerce, where the company owns the goods it sells to consumers, is not permitted.

Marketplace entities also face conditions on how they treat sellers, such as limits on owning or controlling inventory and on influencing prices. Because a model that looks like a marketplace commercially can be treated as inventory-based legally, the contracts and the flow of goods and money need to be reviewed against the policy. Confirm the current conditions before finalising the model, as they have been amended more than once.

Other ways to sell in India

A foreign brand does not have to run a marketplace. It can sell through Indian marketplaces as a seller, appoint distributors, or sell cross-border from abroad. Each route has different registration, customs and tax consequences, and each needs a different answer on entity.

• Selling your own brand: if you manufacture or own a brand in India, different rules apply to how you may sell it online. Get advice on the exact route.
• Selling on third-party marketplaces: you need GST registration and an Indian presence for returns and compliance.
• Cross-border sales: selling into India from abroad raises customs and tax questions. See customs compliance.

Entity set-up and GST

Platforms typically use a private limited company. GST registration is required, and depending on the model the platform may have to collect tax at source from sellers and file monthly returns. Mistakes in GST registration or collection create liability that falls on the company, not the seller.

Set up the company, obtain the registrations in each state where you will hold stock or have a place of business, and build the invoicing and returns process before launch. Where sellers are located in several states, state-wise registrations and place-of-supply rules need care. See GST compliance and company setup for how we handle both.

Consumer data and consumer law

Online businesses hold personal data and deal with consumers directly, which brings obligations under the Digital Personal Data Protection Act and the consumer protection rules. Listings, pricing claims, returns, refunds and grievance handling all fall under these rules, so they belong in the launch plan.

Appoint a grievance officer where required, publish clear terms and return policies, and keep records of consent for the personal data you collect. Review marketing claims and discount practices against the consumer rules. Keep the controls simple and documented, because a regulator or a customer will ask for evidence. See our data protection services for support on notices, consent and security measures.

How A2 Consultants helps

A2 Consultants sets up the Indian entity, structures the investment under the FDI policy, files the foreign exchange reports, and then handles tax, payroll and compliance as your ongoing partner. We act as one point of contact, so licences, banking and tax registrations move in parallel rather than one after another.

A typical engagement starts with a call in which a partner reviews your sector, home country and timeline. We recommend an entity and investment route, prepare the incorporation and FDI filings, open the bank account and tax registrations, and set up monthly compliance. Where a sector licence or state incentive is involved, we run that application alongside the incorporation. See India company setup and FDI structuring, or contact a partner.

This page is general information, not legal or tax advice. Rules and incentive terms change by notification, so confirm the current position before committing capital.