The industry ministry today said it will come out with a definition of ”group company” soon, a clarification that would help global companies like Wal-Mart to begin operations without violating norms. “We are working on a clarification.
I think it will be out in two months,” department of industrial policy and promotion (DIPP) director Deepak Narain told reporters on the sidelines of an Assocham function. Global retail players are seeking clarity on this issue to chalk out their India plans.Online GST Certification Course by TaxGuru & MSME- Click here to Join
As per the DIPP rules, wholesale trade of goods would be permitted among companies of the same group. But such trade should not exceed 25 per cent of the total turnover of the wholesale venture and the wholesale made to the group firms should be for their internal use only.
In April, Bharti-Walmart had sought clarifications from the government on caps imposed on sales by cash-and-carry players to their group”s front-end companies and what exactly are group companies. Bharti-Walmart is a 50:50 joint venture set up in 2007 between Bharti Enterprises and Wal-Mart and is engaged in wholesale trade.
It supplies to Bharti”s front-end retailing arm Bharti Retail that runs the Easy Day stores. Narain further said DIPP would be releasing the remaining five discussion papers on FDI polices by September.
It has already released a concept paper on opening the defence sector for FDI. The DIPP is expected to seek public opinion on opening up of multi-brand retail, agriculture, real estate among others for foreign direct investment.