Cash & Carry Wholesale trading/Wholesale trading, means sale of goods/merchandise to retailers, industrial, commercial, institutional or other professional business users or to other wholesalers and related subordinated service providers and thus sales are from B2B.
Retail Trade means sale of goods/merchandise to end consumers and thus sales are from B2C.
A wholesale/cash & carry trader can undertake retail trading, subject to the conditions as applicable. An entity undertaking wholesale/cash and carry as well as retail business will be mandated to maintain separate books of accounts for these two arms of the business and duly audited by the statutory auditors. Conditions of the FDI policy for wholesale/cash and carry business and for retail business, whether single brand retail or multi brand retail, have to be separately complied with by the respective business arms.
To further explain, assuming all below entities be the one with FDI
A – a wholesaler/ cash & carry trader
B – a marketplace e-commerce
C – a single brand retail trader
D – a multi brand retail trader
If business for Cash & Carry Wholesale Trade and Retail Trade are to be done under a single entity, it is essential that the conditions of the FDI policy for wholesale/cash and carry business and for retail business, whether single brand retail or multi brand retail, have to be separately complied with by the respective business arms.
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under FDI Policy 2020 para 5.2.15 relates to wholesale trading and in bracket it is mentioned as “Including sourcing from MSEs”. What does this mean ? How sourcing from MSEs to be interpreted ?
MSE in FDI Policy 2020 is abbrevated as Micro and Small Enterprise. However the same is defined in Micro, Small and Medium Enterprises Development Act, 2006.
Further Ministry of MSME vide its notification dtd. 1st June, 2020 (effective from 1st July, 2020) revised the following criteria for classification of micro, small and medium enterprises, as follows:
Hence sector/activity specified in 5.2.15 as “Cash & Carry Wholesale Trading/Wholesale Trading (including sourcing from MSEs)” could be interpretated as Cash & Carry Wholesale Trading/ Wholesale trading including sourcing from Mirco and Small Enterprise (as defined in Ministry’s of MSME notification detailed above). We advise to seek professional advice on further details.