Government Stops Flipkart's Food Retail Venture in its Tracks

CIOReviewIndia Team | Monday, 01 June 2020, 11:04 IST

                               Government Stops Flipkart’s Food Retail Venture in its Tracks

Government of India has turned down Flipkart’s  proposal to venture into the food retail business, amounting to a major blow to Walmart, the majority stakeholder in Flipkart. The government said it made its decision on the grounds of regulatory guidelines. Flipkart had floated FarmerMart a year back to make its Food Retail entry. The Department of Promotion of Industry and Internal Trade (DPIIT) has informed Flipkart that it is debarred from entering into food retail segment with its current plan.    

Flipkart planned to come up with FarmerMart with an intention to sell food products made or produced in India through Flipkart and other online platforms. Currently, there is 100 percent FDI allowed in the food retail sector via government’s approval, which was implemented to promote tie-ups with domestic food producers and farmers. The move has served as a dampener to Flipkart’s mission to reach out to the farms directly and sell the products on its platform. It was also planning to enter the physical stores format.

However, Flipkart seems to be not giving up. As per TechCrunch, Rajneesh Kumar, Chief Corporate Affairs Officer at Flipkart, said that the company was evaluating the agency’s response and intended to 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 and transform Indian agriculture,” he added.

It is important to note that Amazon, Zomato and Grofers had secured their approval before the new addendum kicked in wherein it restricted any retail entrant to play only the role of serving as a marketplace for third party sellers, and to neither have its own inventories, nor have equity in any of the players who sell on the platform. The action is purportedly aimed at safeguarding the domestic food producers and keeping the big players from creating hegemony. Flipkart, however, sees its vision in a different light wherein it claims to aim at boosting food and grocery sales and helping farmers produce in line with the demand while assuring a certain level of income.

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