The government has cleared the plans of Japanese trading major Itochu Corporation to set up a wholly-owned company in India to conduct cash-and-carry wholesale operations, making it the second global player in the business after Metro AG.
Itochu will import specific products to stock and sell them on bulk basis to wholesalers and institutions. It will also be free to source products within India. However, it will not be allowed to sell directly to customers.
Internationally, institutions and companies tie up with large trading companies to source materials for their consumption as well as for the use of their employees.
A similar move by Metro AG, the first major trading and retailing global chain to set up cash-and-carry wholesale business in the country, had evoked strong reactions from the government and the local trading community.
It was alleged that the German major, which was allowed to start operations in 2000, was violating its licence conditions and selling directly to consumers.
Indian companies also alleged that Metro had tied up with various companies to offer products to their employees at cheaper rates, which was a form of direct retail. However, in 2003, the government allowed the company to continue its operations in India after reviewing its activities.
As per current foreign investment policy, 100 per cent FDI is allowed in cash-and-carry wholesale trading for export under the automatic route.
Fully foreign companies are also allowed trading of items sourced from the small-scale sector through the FIPB route, subject to a strict ban on domestic retail trading.
Itochu, which plans to invest $10 million in India, will also undertake cash-and-carry wholesale trading of domestically sourced products. The Foreign Investment Promotion Board and the finance ministry have approved the company's plans.
Itochu will also source products from India for international customers and wholesalers. As per its plans, the Indian operations will provide a strategic base for its international trading activities. The company will further provide post and pre sale support to its customers.
Itochu also aims at providing local support for infrastructure and industrial projects and procuring and supplying materials and equipment needed for various projects.
The Indian subsidiary will further facilitate and invest in joint ventures in India.
Founded in 1858, Itochu operates in over 80 countries, covering a broad spectrum of industries.
Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group
© 2025