FDI in Cash & Carry Wholesale and Retail Trade in a Single Entity
August 2, 2018 by bsamrishindia.com
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 A wants to do activities of C and D in separate business arms under the same entity, FDI policy have to be separately complied with by the respective business arms with respect to conditions for retail trade for single and multi brand respectively besides complying with conditions of wholesale cash & carry.
- If B wants to do activities of A, the purchases of B from A cannot be more than 25% of the total purchases of B, if under separate entity as a group company
- C is permitted to do e-commerce to retail customers in the same legal entity
- A and B are not permitted to do sales to retail customers
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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