this story originally appeared in on dec 31 2012 new delhi the government has decided to apply the foreign trade policys definition of group company for sourcing norms in the retail sector that prevent foreign cashandcarry firms from selling more than a fourth of their goods to affiliated entities the foreign trade policy defines a group company as an entity that directly or indirectly can exercise 26 or more of voting rights in the other enterprise or appoint more than 50 of board members the department of industrial policy promotion dipp which frames the foreign direct investment policy had in 2010 introduced a regulation restricting cashandcarry companies from selling more than 25 goods to group companies the stipulation was brought in to preclude indirect entry of foreigners in multibrand retail although earlier this year the sector was opened to fdi up to 51 dipp however did not say in the policy what a group company meant for this purpose leading to ambiguity as the definition varies under different laws differences between the finance and commerce ministries over which definition should be adopted for the fdi policy didnt help matters either said a government official while the dipp wanted a liberal definition covering only wholly owned subsidiaries the finance ministry favoured a more stringent one given by rbi that included affiliate entities with more than 20 interest as group companies both the ministries have now converged on the definition given in the foreign trade policy said the official adding that the dipp is expected to soon issue a clarification the government has in the past examined if bharti walmart and bharti retail were group companies but could not decide in the absence of a clear definition structures will have to be analysed bharti walmart had in 2011 sold nearly 60of its merchandise to bharti retail bharti walmart is a 5050 cashandcarry joint venture between billionaire sunil mittals bharti group and walmart the worlds largest retailer bharti retail is the wholly owned retail arm of the bharti group and walmart has invested 100 million in the holding company of the retail arm through compulsorily convertible debentures ccds a person familiar with the situation said it is likely that bharti walmart and bharti retail will not classify as group companies under the definition a government official said the structures of ventures operating in the retail space would have to be analysed to see if they were in compliance only a close examination of the corporate structure can reveal if an entity should be treated as a group company or not the person said the spokespersons for both bharti retail and bharti walmart declined comment we have not yet seen the governments notification in this regard and are therefore not in a position to comment said the bharti walmart spokesperson experts said incorporating a clear definition in the fdi policy will remove the ambiguity but they sought a single definition across all regulations recently the competition bill tabled in the winter session of