Legal Question in Business Law in India

If a foreign investor invests 95% in cash and carry wholesale trading in india Opening company X as well as having a 5% indian partner, but Company X isn't retailing in India but abroad. Is this allowed under the FDI trading policy?


Asked on 10/20/15, 7:25 pm

2 Answers from Attorneys
Fca Prashant Chavan Expert Edge LLP

21.10.2015

Dear Sir / Madam,

No. Foreign Direct Investments (FDI) in Cash need prior Reserve Bank of India (RBI) approval.

Regards,

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Answered on 10/21/15, 5:42 am
Vivek Mapara Vivek N. Mapara

Sir / Madam

As per Entry No. 6.2.16 of the Latest FDI Policy Announced by the Government, 100 % Foreign Investment is permissible in Cash & Carry Wholesale Trading under Automatic Route i.e. no prior permission is required from the Government.

As per Note appended to the said Entry A Wholesale/Cash & carry trader cannot open retail shops to sell to the consumer directly. Entry No. 6.2.16.2.1 further prohibits Retail Trading by FDI Companies.

Wholesale trading would means sales only for the purpose of trade, business and profession, as opposed to sales for the purpose of personal consumption.

There can be ways out. However, full factual matrix need to be knows, in order to advise appropriately.

I expertise on FDI Laws. Should you have any questions, then please feel free to ask.

Regards

Vivek N Mapara

vnmlaws.com

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Answered on 10/21/15, 12:19 pm


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