The proposal to approve the entry to the food retail sector which was put forward by Flipkart, backed by the giant Walmart has been rejected by the Department for Promotion of Industry and Internal Trade(DPIIT) due to some regulatory issues.
Last year, the company had set up a new local entity which was known as Flipkart Farmer Mart. The main goal behind this entity is, to focus on food retail business in India and to boost up the Indian agriculture sector and food processing industry.
But now, the problem is that the department has rejected the proposal, but Flipkart informed that they are not going to step back. They intend to re-apply for the permit, as they believe that technology and innovation-driven market place can add value to the life of farmers in the country. It will help to eliminate middlemen in the supply chain and more efficiency and transparency can be brought in.
In 2017, Amazon got approval from the government for investment proposals for the retailing of food products in India. Now many customers turned to e-commerce platforms like Grocers, Big Basket, and Amazon India for their grocery purchases during the lockdown because traditional retailing is not possible in this circumstance.
In India, food and groceries are compelling categories in e-commerce. Moreover, it creates frequent touch with customers and may be helpful for the firms who are dealing with them. They can identify the taste, needs, and consumption patterns of the customers. But, online groceries and food industries have been able to contribute to the business only a few, accounting for just 1% of the total sales. Moreover, this pandemic scenario, creates a big barrier to the sales of both amazon and Flipkart, circumstances compelling them to focus on essential goods such as grocery and hygienic goods.
The Flipkart planned to invest $258 million in the newly registered local entity based on food retail in India. If it does not happen, our country and the consumers who are waiting to enjoy and venture out seeking new options in the area of the online food retail market may suffer.