India Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in india, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Online Marketplace and E-Commerce
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India’s eCommerce market is one of the fastest growing in the world. The Indian eCommerce industry is projected to reach $325 billion by 2030, experiencing significant growth. eCommerce activity is increasing, as is the use of digital payment systems. Momentum in this sales channel has been steadily growing but was amplified during the COVID-19 pandemic. It is often beneficial to have a distributor with an online presence and dedicated website positioned to market your product via the eCommerce channel. eCommerce is subject to the Competition Act issued by the Indian government to enforce pricing and distribution laws. To avoid competition law violations, U.S. companies should be aware of such provisions and include relevant clauses in distribution partnership agreements.

Although eCommerce witnessed a steep decline during initial COVID-19 pandemic lockdowns, this channel soon realized accelerated growth across segments as the population adapted, including hyperlocal delivery, digital education, food delivery, digital health, digital media, and entertainment. This was accelerated by rapid adoption of online payment options. India has emerged as a preferred destination for suppliers focused on online sales due to its large consumer base, diverse demographics, low-cost digital infrastructure and services, and supply chain ecosystem.

Legal and Regulatory Environment

Foreign companies are required to establish an Indian entity with goods and services tax (GST) registration or to partner with an Indian distributor or importer while doing business in India. The Ministry of Commerce and Industry regulates online sales in the Indian market.

In 2019, the Indian government released a draft national eCommerce policy to regulate the sector. The policy focuses on cross border data flows, intellectual property, and competition. The Indian government allows 100% FDI in B2B eCommerce firms and 100% FDI in B2C eCommerce under the “automatic route,” which does not require prior approval from the Reserve Bank of India. The eCommerce policy also touches on topics addressed by draft Non-Personal Data Governance Framework and the National Cyber Security Strategy, 2020.
The Indian government also notified of the Digital Personal Data Protection Act in August 2023, which consolidates data usage by all entities for lawful business processing.  With the increasing importance of data protection and privacy, the National eCommerce Policy (“Policy”) aims to regulate cross-border data flow, while enabling sharing of anonymized community data (data collected by IoT devices installed in public spaces like traffic signals or automated entry gates). Conditions are required to be adhered to by business entities which have access to sensitive data of Indian users stored abroad. Sharing such data with third party entities, even with customer consent, is barred under the Policy. Violation of conditions of this Policy will be made accountable to prescribed consequences (as formulated by the Government of India). However, certain categories highlighted in the policy are exempted from restrictions on cross-border data flow. Data not collected in India, B2B data shared between business entities under a commercial contract, data flows through software and cloud computing services (having no personal or community implications), data (excluding data generated by users in India from sources like eCommerce platforms, social media activities, search engines) shared internally by multinational companies are exempted from restrictions on cross-border data flows.

Rules and Regulations Affecting eCommerce

  • Income Tax Act, 1961
  • Consumer Protection Act, 1986
  • Information Technology Act, 2000
  • Foreign Exchange Management Act, 2000
  • Payments and Settlement Systems Act, 2007
  • Companies Act, 2013
  • Laws related to goods and services tax.
  • The Digital Personal Data Protection Act, 2023
     

In July 2020, the Ministry of Consumer Affairs, Food, and Public Distribution (Ministry) published the Consumer Protection (eCommerce) Rules 2020. The rules concern how to display the country of origin of products and services, the labeling of goods with expiration dates, and information about returns, refunds, exchanges, warranties, and guarantees. 

In June 2021, the Ministry proposed additional amendments to the Rules, including alteration of the definition of an eCommerce entity; mandatory registration of eCommerce entities; establishment of a grievance redressal mechanism; a ban on what the Indian government alleges to be the manipulation of eCommerce search results; and a ban on flash sales. 

Though the Indian government allows 100% FDI in the eCommerce marketplace model (ECM), it is not allowed in the inventory-based model. Under the ECM, vendors utilize online portals to sell their products in the eCommerce marketplace, but under the inventory-based model they both own and sell products in the eCommerce marketplace. Following vendor and trader complaints, the Department of Industrial Policy and Promotion imposed stricter regulations on foreign-owned ECMs. Based on a comprehensive review of the FDI rules, the following changes were made:

  • If an ECM owns a business or a start-up, the company is not permitted to sell its products on the same ECM’s portal.
  • No single vendor or trader can account for more than 25% of total sales on an ECM platform.
  • Limits are placed on exclusive partnerships with profitable brands and preferential services to a small number of vendors are prohibited; and
  • ECMs cannot influence product prices.

Consumer Behavior

Customers in India prefer online purchase channels for categories such as accessories, apparel, footwear, personal care products, household supplies, and consumer electronics, with customer preference for online channels estimated from 25% to 30%. The COVID-19 pandemic caused consumers to begin or increase purchases through online channels. The most important factors for purchasing goods online are price, discount, delivery time, seller ratings and reviews, best before date, and country of origin.

According to a report by U.S.-based payment systems company ACI Worldwide, digital payments in India are set to account for 71.7% of total payment volume by 2025, leaving cash and checks at 28.3%. Google Pay, Visa, Mastercard, and Paytm are the digital payment platforms most preferred by consumers.

Artificial Intelligence (AI) is transforming the Indian eCommerce industry by providing high-tech experiences ranging from stores to websites, chatbots, and voice assistants. AI is being utilized to proactively market products and services through popular social media sites including Instagram, Facebook, and WhatsApp. Due to strong competition to expand their customer base, eCommerce players also incorporate AI into their enterprise resource planning systems. 

Cross-border eCommerce is still in its infancy in India. Notable U.S. players include eBay and Amazon, the latter having a strong presence in India. Domestic players such as IndiaMart and TradeIndia are expected to venture into cross-border trade. However, cross-border trade is largely unregulated and therefore attracts the attention of authorities. 

Intellectual Property Rights

Among the major world economies, India continues to present significant challenges with respect to protection and enforcement of intellectual property (IP). Despite numerous initiatives, progress has not kept pace with the high level of demand to foster innovation and promote creativity, including in the eCommerce sector. The government has taken positive steps over the last five years to strengthen its IPR regime, such as modernizing its intellectual property offices, increasing manpower, digitalization, streamlining IP application processes, and spreading IP awareness.  However, India has remained inconsistent in its progress on IP protection and enforcement.  A major issue hampering intellectual property rights protection is India’s lengthy and uncertain legislative process. Additionally, there is no statutory protection for trade secrets, creating uncertainty for businesses that need to secure sensitive information exchanged between parties.

Digital Marketing and Social Media

According to Business Insider, digital marketing through videos saw the highest return on investment in India, at around 62%, followed by branded pages, emails and newsletters, live events and streaming, and influencer marketing. According to Statista, India had over 35 billion digital transactions valued at over $769 billion in 2021. By 2026, the digital transaction volume is expected to exceed 210 billion.

The share of company-owned eCommerce platforms has increased in comparison to online platforms used by marketers to drive sales in India. As such, companies are increasingly relying on their own eCommerce platform rather than third-party eCommerce platforms or social media marketplaces. According to a Statista survey, the most used communication platforms are WhatsApp, Instagram, and Facebook Messenger, all owned by Meta.

eCommerce Business Service Provider Ecosystem

Third-party service providers in India’s eCommerce market can facilitate faster access to online ecosystems by providing services such as imaging, cataloguing, enhanced brand content, account management, advertising, international shipping and logistics, domestic transportation, and tax management. The Amazon Service Provider network, for example, allows sellers to gain access to Amazon’s service provider ecosystem to facilitate sales, fulfilment, and assist with after-sales support across India.

Popular Indian eCommerce Sites

B2C: Amazon.in; Flipkart; Myntra; Tatacliq; Pepperfry; Paytmmall; Nykaa; 1mg; Firstcry; AJIO; Bigbasket; Grofers; Shopclues; MakeMyTrip; Bookmyshow; Koovs; Lenskart; Meesho; and Zomato. 
B2B: Jumbotail; Elasticrun; Ninjacart; DeHaat; Farmley; Udaan; Bizongo; IndiaMart; GoMechanic; Retailio; Saveo; Horeca Stop; ChemX; Infra.Market; NowPurchase; OfBusiness; VendorInfra; Fibre2Fashion; Fashinza; Bijnis; Moglix.

Major Buying Holidays

  • Ramadan (March–April)
  • Rakhi (August)
  • Diwali (October or November of the year)
  • Dussehra (October)
  • Christmas (December) 
  • New Year (January)

Trade Shows and Conferences

  • HGH India – Mumbai, July 2026 
  • Phygital Retail Convention – Mumbai, May 2026 
  • Cosmoprof India- Mumbai, December 2026
  • DigiMarCon India 2025 – New Delhi, August 2027 
     

For more information about export opportunities in this sector, please contact Commercial Specialist Sana Bagwan.

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Global Business Navigator Chatbot Beta

Welcome to the Global Business Navigator, an artificial intelligence (AI) Chatbot from the International Trade Administration (ITA). This tool, currently in beta version testing, is designed to provide general information on the exporting process and the resources available to assist new and experienced U.S. exporters. The Chatbot, developed using Microsoft’s Azure AI services, is trained on ITA’s export-related content and aims to quickly get users the information they need. The Chatbot is intended to make the benefits of exporting more accessible by understanding non-expert language, idiomatic expressions, and foreign languages.

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