In our case one Mr.X from Korea( Foreign Resident)wishes to establish a company in India,main activity of the company is Retail trading of Garments and clothes, textiles. Please explain whether the activity is covered under automatic route as per FDI policy or will require FIPB approval.
Please also define what is wholesale/cash & carry trading ?
13 January 2011
Retail trading by foreigners is not allowed in India.They can undertake only wholesale and cash and carry trading. cash and carry signifies that foreign party is not giving any giving any credit to indian parties and selling its goods in wholesale and in cash to indian parties.
FDI in Retail trading is probhited except single brand retails. SO in your case the client can run business in single brand retils activity subject to SIA/FIPB approval.
Cash & Carry Wholesale trading/Wholesale trading, would mean sale of goods/merchandise to retailers, industrial, commercial, institutional or other professional business users or to other wholesalers and related subordinated service providers. Wholesale trading would, accordingly, be sales for the purpose of trade, business and profession, as opposed to sales for the purpose of personal consumption. The yardstick to determine whether the sale is wholesale or not would be the type of customers to whom the sale is made and not the size and volume of sales. Wholesale trading would include resale, processing and thereafter sale, bulk imports with ex-port/ex-bonded warehouse business sales and B2B e-Commerce. For Example Metro Cash and carry store which cater only professional and B2B customer.
You just share a brief detail about your business plan, product than we can help you to get necessary clearance and help you to choose the business model.
In case of any concern please feel free to contact.
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