Government rejects Flipkart's proposal to enter food retail sector; company to re-apply

Department for Promotion of Industry and Internal Tre (DPIIT) has rejected Walmart-backed Flipkart's proposal seeking approval for entry to food retail sector citing a regulatory issue, an official said on Monday.

government permits 100% foreign direct investment in food retail for food produced and manufactured in India. Last year, company h set up a new local entity - Flipkart Farmermart - to focus on food retail in India and h applied for requisite licences from government. 

Flipkart Group CEO Kalyan Krishnamurthy, at that time, h said that move an important part of company's efforts to boost Indian agriculture as well as food processing industry in country. "Yes, department has rejected proposal," government official said.

Commenting on development, a company spokesperson said that Flipkart intends to re-apply for permit. "At Flipkart, we believe that techlogy and invation-driven marketplace can d significant value to our country's farmers and food processing sector by bringing value chain efficiency and transparency. This will furr aid in boosting farmers' income and transform Indian agriculture."

"We are evaluating department's response and intend to re-apply as we look to continue making a significant impact on small businesses and communities in India," spokesperson said. Interestingly, Amazon h received government's d for its USD 500 million investment proposal for retailing of food products in India in 2017. 

Grocery segment accounts for a significant portion of urganised retail segment in country. Estimates suggest market be worth over USD 200 billion in India.

grocery segment has witnessed significant growth amid COVID-19 pandemic. Many people turned to e-commerce platforms like Grofers, BigBasket and Amazon India for ir grocery purchases during lockdown as y looked at maintaining social distance. Market watchers feel that grocery segment would continue to scale in coming months in view of COVID-19 situation.