Govt rejects Flipkart’s foray into food retail business

Flipkart is planning to re-apply for permission from the government.

The department did not elaborate on its decision. (REUTERS)

The Indian government on Monday rejected Walmart-owned Flipkart's proposal to venture into the food retail business citing regulatory hurdles.

As per a TechCrunch report, the Department for Promotion of Industry and Internal Trade (DPIIT), which is a part of the Ministry of Commerce and Industry, told the e-retailer that its proposed plan to enter the food retail business does not comply with the country's regulatory guidelines. The department, however, did not elaborate on its decision.

At Flipkart, we believe that technology and the 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 in boosting farmers' income and transform Indian agriculture," a Flipkart spokesperson said in a statement to the publication adding that the company was evaluating the department's response and it intended to re-apply soon.

Flipkart Group CEO Kalyan Krishnammurthy back in October last year had announced the company's plans of investing $258 million in a new venture called Flipkart Farmermart. The aim of the venture was to invest in the local agricultural ecosystem and supply-chain and work with farmers, Farmer Producers Organisations (FPOs) and the food processing industry in the country for the same.

“In line with the government of India's FDI (foreign direct investment) policy, which allows 100% FDI in food retail for food produced and manufactured in India, Flipkart is applying for appropriate licences from the government,” Krishnamurthy had said in a statement at the time.

But now, the company's plans have been derailed owing to the organisation's decision.

It is worth noting that, Flipkart is not the only e-retailer that aims to foray into the food retail business. Amazon secured an approval from the government back in 2017. In addition to this, retail outlets such as Grofers and BigBasket too have been granted the permission by the government.