FDI Inflows to Trading

FDI Inflows to Trading is permitted up to 51 percent under automatic route, provided it is chiefly export-oriented. The basic undertakings in this regard should comprise an export house, trading house, super trading house or even a star trading house.

FDI Inflows to Trading Sector in India under FIPB Route

Following are the activities in various trading companies in India which are allowed 100 percent foreign direct investment under the Foreign Investment Promotion Board (FIPB):

• Export-oriented activities
• Bulk imports with export or ex-bonded selling of warehouse
• Wholesale trading and related activities
• Trading companies of the similar group are permitted 75 percent FDI in terms of acquisition and selling of goods and services among them. This does not include any intervention of a third party or onward distribution and sales

FDI Inflows to Trading in India under EXIM Policy

These are the kinds of trading activities that are allowed FDI Inflows under the provisions of Export-Import (EXIM) Policy:

• Trading companies that offer after sales services are permitted FDI up to 100 percent
• Joint Venture companies who are involved in wholesale trading and wish to sell the manufactured products in the Indian market and who also hold equity participation in the country
• Trading companies that are involved in selling of hi-tech goods
• Companies which are actively involved in selling of products in the social sector
• Companies which carry out trading of medical and diagnostic equipments
• Items that are manufactured in the small scale trading enterprises and which manufacture products depending on the technology provided to them along with certain specifications prescribed to them in terms of quality can be sold under the company's brand name
• Products or items manufactured in the domestic market for exporting them in the overseas countries
• Trading companies which have approval for manufacturing can be availed test marketing facility for the items for a period of two years and the investments will be made on this at the same time with the same on manufacturing

FDI Policy for Trading in India

The E-Commerce activities are permitted 100 percent foreign direct investment, provided these companies would spend 26 percent of their equity as a support to the Indian population within five years. This can only be executed if these companies are scheduled in other countries across the globe as well. These trading companies would be involved exclusively in business to business (B2B) e-commerce activities which does not include retail trading.

Last Updated on 4/23/2011