BENGALURU: Flipkart’s food retail ambition has been temporarily halted as the Department of Industry and Internal Trade (DPIIT) disagreed to provide the requisite licenses to e-tailer’s retail arm Flipkart FarmerMart. The move follows after the Walmart-owned e-commerce major had filed an application seeking approval for entry to the burgeoning food retail sector in 2019.
DPIIT’s rejection of Flipkart’s license has reportedly been done on the grounds of its Memorandum of Association that does not allow it to go ahead with food retail business. Meanwhile, Flipkart said that it will re-apply for the license.
“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 and transform Indian agriculture,” the Bengaluru-based e-commerce firm said in a statement.
Kalyan Krishnamurthy, CEO, Flipkart had last year unveiled the company’s plan to foray into food retail business by pumping in nearly $258 million through a farm to fork initiative.The e-tailer added it has been onboarding thousands of farmers, associating with last-mile delivery networks and sell the agriculture produce directly on their e-commerce platforms. The plan was also to strengthen the fresh foods
offerings through Walmart wholesale stores.
Currently, the government allows 100 per cent FDI into the food retail. A similar initiative has been undertaken by Amazon’s retail vertical, Amazon Retail India Pvt. Ltd after getting a government nod in 2017. So far, Amazon has invested nearly $500 million in its food retail venture and outlined its plans to open a farm collection centre in Pune.
Other companies including Zomato, Grofers have also received the regulatory nod from the DPIIT for their food retail operations. However, the authorities are strictly monitoring the operations of these firms to check there are no violations in adhering to the guidelines of acting as just marketplaces for selling products from third party sellers.
Even as the online grocery and fresh foods market in India constitutes only 0.2 per cent of the overall $580 billion retail market in India, the segment is growing at a pace of 55 per cent estimated to touch $10.5 billion by 2023, according to a report by market intelligence firm Redseer.