Govt. rejects Flipkart's proposal for entry into food retail sector

The Department for Promotion of Industry and Internal Trade (DPIIT) on Monday rejected Walmart-backed Flipkart's proposal seeking approval for entry into the food retail sector citing a regulatory issue, PTI reported.

The government permits 100 per cent foreign direct investment in food retail for items produced and manufactured in India. The grocery segment accounts for a significant portion of the unorganised retail segment in the country. Estimates suggest the market is worth over $200 billion in India.

A year ago, the organization had set up another neighborhood element - Flipkart Farmermart - to concentrate on food retail in India and had applied for essential licenses from the legislature. 

Flipkart Group CEO Kalyan Krishnamurthy, around then, had said that the move a significant piece of the organization's endeavors to help Indian farming just as the food handling industry in the nation. 

"Indeed, the office has dismissed the proposition," the administration official said. 

Remarking on the turn of events, an organization representative



said that Flipkart plans to re-apply for the license. 

Flipkart, we accept that innovation and the development driven commercial center can increase the value of our nation's ranchers and food handling part by bringing esteem chain effectiveness and straightforwardness. This will additionally help in boosting ranchers' pay and change Indian horticulture.

"We are evaluating the department's response and intend to re-apply as we look to continue making a significant impact on small businesses and communities in India," the spokesperson said.

Interestingly, Amazon had received the government's nod for its $500 million investment proposal for retailing of food products in India in 2017.

The grocery segment has witnessed significant growth amid the COVID-19 pandemic. Many people turned to e-commerce platforms like Grofers, BigBasket, and Amazon India for their grocery purchases during the lockdown as they looked at maintaining social distance.

Market watchers feel that the grocery segment would continue to scale in the coming months in view of the COVID-19 situation.