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DIPP to clarify on 'group company' soon
1 June 2010: Department of Industrial Policy and Promotion (DIPP) is likely to come out with a definition of 'group company' soon, a clarification that will help global companies like Wal-Mart to begin operations without violating norms.
As per the DIPP rules, wholesale trade of goods will 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 JV 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.
Source: Economic Times