The Hindu Business Line : Foreign cos enter traditional wholesaling domain

Wholesale trading in India is changing in character. Since pre-Independence, it has been dominated by the traditional caste-specific trading community. However, today, foreign investors seem to be making a beeline for this traditional trade. The first three months of the year (January- March) has seen one-third of foreign direct investment (FDI) proposals approved by the Government in this sector.

Though in terms of investment it is less than 17 per cent (Rs 256.79 crore) of the total investments approved (Rs 1,542.57 crore) in the period, the socio-economic shift of the sector is significant.

Between January and March this year, the Foreign Investment Promotion Board (FIPB) had approved 100 FDI proposals, out of which 33 are proposals to undertake wholesale trading in India by foreign companies. These are in a wide range of product categories — from shoes to animal feed, from colour TVs and electrical equipments to hardware for doors and windows, to name a few.

A senior law consultant, who assists foreign companies setting up shop here, points out that the trend assumes significance because earlier foreign companies looking at wholesale trading in India were mainly interested in importing products to sell in the Indian market. "But now these companies are coming in purely as trading firms and sourcing and selling domestically only. This may pose strong competition to the local trading population," he said.

The single largest investor in wholesale trading to have got Government approval is Cargill Holding BV of Holland, which is poised to invest Rs 238 crore for trading in commodities including food grains and animal feed, and other industrial commodities.

Similarly, Sharp Corporation of Japan, which already has a manufacturing base in India, will now start trading in colour TVs, VCRs and similar items from other manufacturers as well.

The UK-based Randox Laboratories, whose products were earlier imported by domestic importers, will now be setting up its own subsidiary with an investment of Rs 15.5 crore for importing its own products and undertaking wholesale trading in them.

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