Ordering groceries in 10 minutes may feel like magic, but warehouses, algorithms, labour, and foreign capital, all operating in a legal grey area, make it possible. E-commerce has transformed Indian retail, but the rules governing it have not kept pace. Budget 2026 offers an opportunity to bring clarity to this sector while still fostering innovation.

FDI rules for a new era

India’s e-commerce regime rests on two models: the FDI-permitted “marketplace” model, where the platform acts only as an intermediary, and the FDI-barred “inventory-led” model, where it owns and sells goods directly to consumers. Many marketplace platforms use affiliated sellers that depend entirely on them, blurring who really controls inventory and pricing.

The government has considered allowing FDI in inventory-led platforms that only serve export markets by selling goods made in India. This could help manufacturers reach global buyers, but without strict firewalls, such a move may become a backdoor into the domestic retail market.

Budget 2026 can address this by defining platform-affiliated sellers and creating a separate compliance track for export-only platforms. Such measures would protect the spirit of India’s FDI policy while backing its digital trade ambitions.

The dark-store grey zone

Dark stores are the hidden engine of quick-commerce, yet the law does not clearly define what they are, how they should be zoned, or how labour laws apply to gig workers who operate them. There are also concerns about foreign-funded marketplaces using dark stores to run an inventory-led model, despite the FDI bar.

Regulators are also questioning the “10-minute delivery” claims, sharpening the debate on where to draw the line between speed, safety, and fair competition.

Budget 2026 should not wait for a crisis. It can define dark stores, require their registration and disclosure, and, in collaboration with state governments, issue model land-use and zoning guidelines. It should also extend basic social-security protections to gig workers in this sector, recognising their central role in India’s urban retail ecosystem.

Predatory pricing and the consumer dilemma

Deep discounts, festive sales, and constant price wars have been fuelling India’s e-commerce boom. Platforms call this healthy competition; small traders see it as predatory pricing designed to push them out of the market.

Some trade bodies have even sought agriculture-style minimum prices for essential retail goods, even though the Competition Commission of India (CCI) already has powers to punish predatory pricing.

Budget 2026 should avoid blunt price controls that appear pro-consumer but ultimately hurt choice and innovation. Instead, it can increase funding for CCI enforcement, fast-track digital-retail cases, and set out a voluntary compliance charter for platforms, enforcing competition law case-by-case rather than through sweeping price caps that could freeze a fast-moving market.

Your data, their algorithms

Digital retail runs on data. Platforms track browsing, purchase history, location, and behaviour to shape recommendations, prices, and promotions. This can make shopping easier, but it also raises concerns about privacy and fairness. Platforms’ reliance on affiliated sellers, in-house brands, and targeted recommendations also raises concerns about platform neutrality, with some sellers potentially receiving preferential treatment in search rankings, discounts, or visibility.

The Digital Personal Data Protection Act, 2023, is a start, but it does not cover non-personal data or how consumer data is shared with sellers and advertisers. Policymakers have also begun to act against “dark patterns”, which are UX design tricks that push consumers into choices they may not want. New consumer-protection guidelines already ban several such deceptive practices.

Budget 2026 can reinforce these developments by operationalising the data protection board, supporting digital-rights campaigns, and nudging platforms to publish transparency reports on their algorithms and use of consumer data.

A sector over-regulated and under-clarified

The deeper problem is not a lack of regulation but a lack of coordination. FDI norms, consumer protection law, e-commerce rules, competition law, data protection regulations, and state-level zoning rules now overlap, creating a patchwork of confusion and high compliance costs for SMEs and start-ups. Key policy tools, including the long-pending national e-commerce and retail policies, and a possible quick-commerce framework, remain stalled.

Budget 2026 can start to harmonise these strands of regulation. A single-window digital compliance system for e-commerce would provide greater ease of doing business and be vital for SMEs and start-ups that today scale despite regulation, not because of it.

What the industry really needs from Budget 2026

Budget debates often focus on tax breaks or GST tweaks. For retail, the bigger need now is for clear, simple rules. If the budget can provide legal certainty and foster, rather than micromanage innovations, India can move from being just a massive consumption market to a global standard-setter in e-commerce governance. Targeted regulation, or the absence thereof, will determine who wins, who loses, and how fair the digital marketplace is. Budget 2026 is an opportunity to get this foundation right.

(Charkha is partner, Economic Laws Practice; Agrawal is advocate, Economic Laws Practice. Views are personal.)

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