Govt Stops Flipkart From Entering Online Food Retail; Cancels Rs 2000 Cr Investment From Walmart

Walmart backed Flipkart’s foray into the food industry has been turned down by the DPIIT, at least for the time being.

However, this hasn’t reduced the disappointment for Walmart, as it had recently announced that its business in Asia’s third-largest economy was among one of the worst impacted sections of the Covid outbreak.

Flipkart’s Plan of Entering the Food Industry Turns Down

The Department for Promotion of Industry and Internal Trade (DPIIT), a part of the country’s Ministry of Commerce and Industry informed Flipkart that its proposed plan to enter the food retail business does not follow the regulatory guidelines.

Even though the government body did not elaborately list down the exact reason for this denial of Flipkart’s feat, it just left the discussion saying that Flipkart’s guidelines do not comply by the regulations.

As per the chief corporate affairs officer at Flipkart, Rajneesh Kumar, the company was evaluating the agency’s response and intended to re-apply.

Flipkart Plans to Invest $258 Million in Agriculture

 Rajneesh Kumar said that Flipkart believes that a technology and innovation-driven marketplace can add significant value to the country’s farmers and food processing sector by bringing value-chain efficiency and transparency. 

This will help in boosting farmers’ income and transform Indian agriculture.

While announcing the plan, Flipkart Group CEO Kalyan Krishnamurthy said last year that the company planned to invest $258 Million in the agriculture industry.

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

This food retail unit would help in boosting farmers’ income and result in affordable, quality food for millions of customers across the country.

Flipkart and its Competitors

Flipkart’s e-commerce and grocery competitors like Amazon, Zomato and Grofers received their approvals from New Delhi.

At present, the authorities in New Delhi allow 100% foreign direct investment in food retail, for entering the food retail business.

Food and grocery are compelling categories for e-commerce businesses in India as it enables them to engage with their customers more frequently.