Quick commerce has grown exponentially in the past few years to become one of the most striking growth stories in India’s digital economy, transforming how consumers access everyday essentials across groceries, fast-moving consumer goods and personal care items. Characterised by deliveries within 10 to 30 minutes of an online order, quick commerce has redefined the boundaries of e-commerce and logistics, bringing purchases once made at kiranas, or mom and pop stores, into the digital fold.
Raghubir Menon
Partner
Shardul Amarchand Mangaldas & Co
Mumbai
Tel: +91 99 1099 8321
Email: raghubir.menon@amsshardul.com
The sector’s momentum has since been driven by the growing use of smartphones, the rapid adoption of digital payment systems, and a deep behavioural shift towards convenience and instant fulfilment. The Indian quick commerce market, valued at about USD3.34 billion in 2024, is projected to reach USD9.95 billion by 2029, reflecting how rapidly instant delivery has moved from novelty to necessity in urban life.
The pace of this growth has raised nuanced regulatory and policy challenges. Much of the estimated USD6 billion of foreign direct investment (FDI) that has flowed into leading platforms such as Blinkit, Instamart and Zepto comes from offshore investors, bringing the sector firmly within the ambit of India’s FDI and e-commerce policy framework. The framework, shaped by concerns about protecting small domestic traders and kirana networks from large organised players, now finds itself tested by a business model that sits at the crossroads of retail, technology and logistics.
This article examines how India’s FDI and e-commerce laws engage with the emerging quick commerce sector and reflects on the accompanying opportunities and compliance challenges.
Regulatory landscape
Ekta Gupta
Partner
Shardul Amarchand Mangaldas & Co
Mumbai
Tel: +91 98 7179 0537
Email: ekta.gupta@amsshardul.com
The Consolidated Foreign Direct Investment Policy, 2020, read with the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (collectively, the FDI laws), in relation to e-commerce, is one of the key regulatory frameworks applicable to quick commerce businesses as well.
The FDI laws draw a sharp distinction between the marketplace model (where the e-commerce platform merely facilitates transactions between sellers and customers) and the inventory-based model (where the platform itself owns or controls the goods it sells). While 100% FDI is permitted in the marketplace model of e-commerce, the inventory-based model is treated as retail trading, where FDI remains restricted.
To preserve such distinction, the FDI laws restrict marketplace entities and their group entities from selling on the marketplace platform, exercising inventory control, influencing prices or offering preferential treatment. Ancillary support services such as warehousing, logistics and payment collection are to be provided on fair and non-discriminatory terms. This structure allowed India to attract substantial FDI while protecting small retailers, enabling steady growth of the e-commerce ecosystem.
While the e-commerce conditionalities govern FDI in quick commerce, quick commerce business models often operate at the intersection of multiple sectors such as wholesale trading, logistics, technology and even food safety. Consequently, quick commerce entities are also governed by the broader spectrum of the FDI conditionalities, including wholesale trading and manufacturing, and various other sector-specific rules, such as:
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- the Consumer Protection (E-Commerce) Rules, 2020 to protect consumer interests in online transactions;
- the Guidelines for Prevention and Regulation of Dark Patterns to curb unfair trade practices and misleading advertisements; and
- norms prescribed by the Food Safety and Standards Authority of India on hygiene, storage and handling of food products at the “dark stores”.
Under FDI laws, entities engaged in manufacturing activities in India, whether directly or through contract manufacturing, are permitted to sell their manufactured products (including through e-commerce) without attracting the retail sector restrictions. Such an exemption has particular relevance for quick commerce operators developing private-label goods, allowing them to enter the retail segment while promoting the Indian government’s “Make in India” vision.
Together, these frameworks have not only regulated but also enabled the evolution of India’s digital retail economy, from traditional e-commerce to its ‘quicker’ and more localised counterpart. As the quick commerce industry continues to expand, its growth depends on how nimbly it can adapt its operational structures within such regulatory boundaries.
Business models
Rooha Khurshid
Senior Associate
Shardul Amarchand Mangaldas & Co
Mumbai
Tel: +91 98 3124 9378
Email: rooha.khurshid@AMSShardul.com
Quick commerce has swept away and to an extent outperformed traditional e-commerce. With its exponential growth, quick commerce in India is no longer limited to last-minute essentials and household goods, but now offers a much wider range of products within minutes.
Key to the success of quick commerce has been the emergence of “dark stores”, which are micro-warehouses strategically located in dense urban neighbourhoods that store, pack and dispatch orders in real time. Their proximity to consumers, coupled with advances in logistics and software integration, has redefined how inventory, delivery and customer interfaces function across the supply and value chains.
In addition, the technology and software stack of quick commerce are equally critical. Through synchronised data flows, they enable instant co-ordination between sellers, delivery partners, warehouses and consumers, creating a seamless cycle of order management, stock visibility and fulfilment. In effect, quick commerce integrates every operational limb of traditional e-commerce into a single, continuously updating system.
However, this very integration blurs the line between facilitation and control, reopening longstanding regulatory questions under India’s foreign investment regime. To meet rapid-delivery expectations, operators need granular visibility and oversight over inventory held in dark stores. Similarly, tools such as real-time discounting or dynamic pricing, although algorithmic suggestions, risk being viewed as a pricing influence.
From a regulatory perspective, quick commerce players that are Indian-owned and controlled companies (IOCCs) can maintain their own inventory of goods and control other platform-related operational matters. This is because, on account of being an IOCC, the FDI restrictions on e-commerce, including the restriction on engaging in the inventory model of e-commerce, do not apply to such businesses.
Conversely, quick commerce models involving foreign-owned or controlled companies (FOCCs) typically see the FOCC entity operate purely as an intermediary connecting buyers and sellers through their platforms without maintaining any inventory of goods or exerting any control over pricing and other platform-related operational matters.
The FOCC quick commerce platforms often diversify into allied services such as advertising, logistics, warehousing, payments and promotional campaigns (such as cashback and loyalty schemes). While such activities are technically distinct, they often feed into the same operational supply chain, requiring careful legal and operational ring-fencing to stay legally compliant.
There has been a growing use of the “manufacturing exemption” under the FDI laws. Entities engaged in manufacturing in India, either directly or through contract manufacturing arrangements, are permitted to sell their products online without triggering the e-commerce retail restrictions. Several quick commerce players have tapped into this route through private-label offerings or in-house product lines to expand margins.
Across these models, business structuring in quick commerce indicates a spectrum ranging from entities following the IOCC structures, to which the FDI laws do not apply, to entities adopting compliance safeguards within pure marketplace models. Between the two lie hybrid structures distributing technology, logistics and wholesale functions across separate entities to balance operational flexibility with legal compliance.
Compliance challenges
Srobona Ghosh
Associate
Shardul Amarchand Mangaldas & Co
Mumbai
Tel: +91 88 0049 1493
Email: srobona.ghosh@amsshardul.com
While the structural and operational distinctions in the quick commerce models are designed to comply with India’s foreign investment and compliance framework, these measures have not entirely insulated the quick commerce sector from increasing regulatory scrutiny. As the sector scales, it continues to attract the attention of policymakers and regulatory authorities alike.
Allegations of deep discounting, preferential listing and the use of dark patterns in digital interfaces have already drawn the attention of regulators. Similarly, concerns around predatory pricing, particularly where deep-pocketed investors sustain below-cost operations, have led to discussions around the need for closer monitoring of market conduct and pricing transparency.
At the operational level as well, regulatory oversight is becoming more granular. Authorities have undertaken on-ground inspections of dark stores to verify compliance with food safety norms. The practical overlaps between inventory co-ordination, pricing visibility and algorithmic product placement have also raised interpretational challenges under the FDI laws.
Further, the constant flow of data and transactions, coupled with the reliance on dark stores and third-party delivery networks to maintain delivery timelines, has complicated the task of ensuring uniform compliance with e-commerce and consumer protection obligations. The increasing role of algorithms and automated decision-making in enhancing consumer experience introduces yet another layer of regulatory sensitivity in areas such as data protection and usage practices.
For market players, compliance is no longer confined to adherence to a single policy instrument, but has evolved into an exercise in navigating a dense web of overlapping sectoral and consumer laws. Such requirements can prove particularly cumbersome for entities with foreign investment, given the layered conditions under the FDI laws and the interpretational uncertainties that accompany them. As a result, several operators find it imperative to adopt the IOCC model as a more practical structure for ensuring regulatory comfort. It offers operational flexibility while mitigating exposure to the restrictions applicable to FOCCs.
Having said that, even within the IOCC framework, the challenge remains one of balancing operational flexibility with regulatory alignment, underscoring that no single model or rule can fully capture the evolving realities of India’s quick commerce ecosystem.
Conclusion
During the past decade, India’s FDI framework for e-commerce has evolved in line with its growing digital economy, balancing the need to safeguard local businesses with the ambition to attract global investment and technology. In many ways, such a regulatory structure has already laid the foundation for quick commerce to flourish.
The rapid rise of quick commerce has captured the attention of investors and regulators alike. As leading players prepare to tap the Indian capital markets, regulators find themselves revisiting questions first raised during the early years of e-commerce regarding market control, consumer protection and the role of foreign capital in shaping domestic retail. With trade associations increasingly flagging concerns around foreign exchange, competition and consumer protection laws, regulatory attention is only expected to deepen.
Amid the environment of enhanced regulatory scrutiny, India remains well positioned to harness the full potential of quick commerce and evolve its policy framework without compromising on safeguard concerns for the sensitive kirana stores.
Shardul Amarchand Mangaldas & Co
Express Towers, 23rd Floor, Nariman Point
Mumbai – 400 021, India
Tel: +91 22 4933 5555
Email: raghubir.menon@amsshardul.com
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