The Indian government could be preparing to relax some of the restrictions on foreign direct investment in the cash-and-carry sector.
Recently introduced regulations on wholesale operations stipulate that, while cash-and-carry businesses backed by international retailers can sell products to group companies, the revenues generated must not exceed 25% of sales.
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The regulation looked set to hamper retail operations where an Indian company established a cash-and-carry venture with an international player in order to source goods for its consumer retail business.
For its part, the global retailer – which is barred from investing in multi-brand consumer retail in India – was be provided with a foothold in the market.
A number of ventures – including those between Bharti Enterprises and Wal-Mart, as well as Tata and Tesco – had taken this route.
However, according to a report in The Economic Times, the Indian government could be preparing to relax this new regulation.
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By GlobalData“We are looking at relaxing some conditions… We will soon initiate consultations with concerned ministries on the issue,” an official with the department of industrial policy and promotion (DIPP) told the paper.
The relaxation could involve a change in the definition of “group companies”, the official said.
