Industry & Economy
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Foreign Direct Investment
100% FDI in wholesale trading under automatic route likely
Ambarish Mukherjee
New Delhi
,
March 14
IN order to facilitate easier inflow of foreign direct investment, the Government is planning to permit 100 per cent foreign direct investment (FDI) in wholesale trading under the automatic route.
The activities likely to be permitted under the automatic route are bulk imports with export and ex-bonded warehouse sales and cash-and-carry wholesale trading.
As of now only 51 per cent FDI is permitted in wholesale trading through the automatic route. For stakes beyond 51 per cent, prior approval of the Foreign Investment Promotion Board (FIPB) is required.
There is also a strict stipulation that these entities are not to undertake retail trading.
FDI in retail trade is not permitted at the moment, but the Finance Minister, Mr P. Chidambaram, has given the indication in his Budget speech that this sector too could be opened subsequently.
The Commerce and Industry Minister, Mr Kamal Nath, has also confirmed that the matter is under Government consideration.
The Reserve Bank of India monitors the automatic route while the FIPB is a part of the Ministry of Finance. The objective to put this sector under the automatic route is to make the process hassle-free for the investors, sources said.
On an average, the FIPB receives more than a dozen applications every month from foreign companies as well as from non-resident Indians (NRIs) for setting up wholly owned subsidiaries to undertake wholesale trading activities.
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