Para 2.13
- Document type
- Policy
- Dated
- Category
- Policy
Foreign Investment Policy for Trading Activities
- 2.13
- Foreign investment for trading can be approved through the automatic route up to 51% foreign equity, and beyond by the Government through FIPB. For approval through the automatic route, the requirement would be that (i) the undertaking concerned should be an export house, trading house, super trading house or a star trading house registered under the provisions of the Export and Import policy in force. However, under the Government route
- 100% FDI is permitted in case of trading companies for the following activities:
- exports;
- bulk imports with export/ex-bonded warehouse sales;
- cash and carry wholesale trading;
- other import of goods or services provided at least 75% is for procurement and sale of goods and services among the companies of the same group and for third party use or onward transfer/distribution/sales.
- The following kinds of trading are also permitted, subject to provisions of EXIM Policy:
- Companies for providing after sales services (that is not trading per se)
- Domestic trading of products is permitted at the wholesale level by such trading companies who wish to market manufactured products on behalf of their joint ventures in which they have equity participation in India.
- Trading of hi-tech items/items requiring specialised after sales service.
- Trading of items for social sector
- Trading of hi-tech, medical and diagnostic items.
- Trading of items sourced from the small scale sector which, based on technology provided and laid down quality specifications, a company can market that item under its brand name.
- Domestic sourcing of products for export.
- Test marketing of such items for which a company has approval for manufacture provided such test marketing facility will be for a period of two years, and investment in setting up manufacturing facilities commences simultaneously with test marketing.
- FDI upto 100% permitted for e-commerce activities subject to the condition that such companies would divest 26% of their equity in favour of the Indian public in 5 years, if these companies are listed in other parts of the world. Such companies would engage only in business to business (B2B) e-commerce and not in retail trading.