Rules on FDI in Retail Changed

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Sept. 30 – Authorities have revised rules on goods sourced from foreign investment-funded wholesale ventures by doing away with the restriction that goods can only be used internally.

The current limit on such sales will still apply though, restricting such transactions to only up to 25 percent of the total sales of the wholesale company.

“The change has been made in response to requests for simplification of the guidelines received from stakeholders,” the industry ministry said, also referring to the new consolidated wholesale policy applicable beginning October 1.

Changes were also made in relation to funding; allowing the use of internal funds for investment in downstream ventures.

The current wholesale limits are in place to block indirect foreign investment in the industry. India maintains a tight hold on its retail industry to protect small local businesses from global players. Wholesale ventures are allowed 100 percent foreign direct investment but similar investment in multi-brand retail is still forbidden.