Flipkart denied entry into India's food retail business

IN a setback to Walmart-owned Flipkart, the Indian government has rejected the firm's proposal to enter the huge food retail business in the country.

Walmart recently said that its India business is one of the worst impacted by the global Covid-19 pandemic.

India's commerce and industry ministry's wing, the department for promotion of industry and internal trade, has informed Flipkart that its plan does not comply with regulatory guidelines, reported Techcrunch.

However, Rajneesh Kumar, chief corporate affairs officer at Flipkart, said that the company would re-apply.

“At Flipkart, we believe that technology and innovation driven marketplace can add significant value to our country’s farmers and food processing sector by bringing value chain efficiency and transparency. This will further aid boosting farmers’ income & transform Indian agriculture,” he added.

While announcing the plan to enter the nation’s growing food retail market, Kalyan Krishnamurthy, Flipkart Group CEO, said in October 2019 that the company planned to invest $258 million in the new venture.

Flipkart planned to invest deeply in the local agriculture-ecosystem, supply chain, and work with tens of thousands of small farmers, their associations, and the nation’s food processing industry, reports said.

According to Flipkart, the proposed food retail unit would help “multiply farmers’ income and bring 'affordable, quality food' for millions of customers.

Many e-commerce and grocery firms in India, including Amazon, Zomato, and Grofers, have previously secured approval in India, which currently permits 100 per cent foreign direct investment in food retail, for entering the food retail business.

India’s online food and grocery market remain significantly tiny, accounting for just one per cent of the overall sales.

India's lockdown to contain the spread of the Covid-19 in late March restricted Amazon and Flipkart from delivering in many states and only sell “essential items” such as grocery and hygienic products.