Walmart-Backed Flipkart’s Food Retail Plan Hits A Regulatory Hurdle
The move puts Flipkart at a disadvantage to Amazon, Big Basket and Grofers, which already sell fresh food and vegetables online.
Flipkart Group said India has rejected Walmart-owned online retailer’s plan to sell food, fruits and vegetables through a new local unit.
The Department for Promotion of Industry and Internal Trade last week rejected the proposal, Flikpart said in a statement.
While the company didn’t give details, a person familiar with the government memo said the department cited regulatory issues without elaborating. The person spoke on the condition of anonymity as he’s not authorised to speak to the media.
A Flipkart spokesperson told BloombergQuint and that the company is evaluating the department’s response and intended to reapply.
BloombergQuint awaits a response to queries emailed to DPIIT.
The online retailer was late to enter the grocery segment and planned to launch FarmerMart for its second foray into fresh food retailing. Its rivals Amazon, Alibaba-backed Big Basket and Softbank-backed Grofers have already secured approval that permitted 100% foreign direct investment in food retail.
In 2018, the department had tweaked rules allowing food retail but mandated firms that have foreign investments to maintain separate books of accounts and inventories in warehouses. It’s also the category allowing online retailers to sell directly to consumers and launch private labels.
Food and grocery, given its repeat and high-frequency usage, are important categories for e-commerce businesses in India. Flipkart applied for requisite permits last year. Amazon received the government's nod for its $500 million investment proposal for retailing of food products in 2017.