• DPIIT has decided to block the entry of Flipkart in the food retail business, the details pertaining to the decision have not been publicly revealed.
  • Flipkart announced its plan to enter the food retail business back in October of last year.

Flipkart’s move to enter the food retail business has been rejected by the government of India. This is a major setback for Walmart which is a majority stakeholder in the e-commerce firm and counts its business in India as one of the worst affected due to the COVID 19 pandemic.

According to the Department for Promotion of Industry and Internal Trade (DPIIT), Flipkart’s entry was blocked because of the company’s failure to comply with regulatory guidelines. However, DPIIT did not disclose any details as to why the regulatory bodies decided not to do so.

Rajneesh Kumar, the Chief Corporate Officer at Flipkart said that a marketplace driven by technology and innovation will bring transparency and supply chain efficiency to the country’s farmers and food processing sector and boost farmer’s income.

In October of last year, Flipkart CEO Kalyan Krishnamurthy revealed that the company planned to invest USD 258 million in the new venture and said that the new agriculture-ecosystem will assist tens and thousands of small farmers by multiplying their incomes and bring affordable and quality food to millions across the country.

The food and grocery business has always been a compelling proposition for the e-commerce industry and New Delhi allows 100% Foreign Direct Investment in the food retail business. Businesses like Zomato, Grofers, and Amazon have previously secured approval from the governing body to enter food retail. A reliable insider at Flipkart revealed that officials at the company were at a loss for words as to why their application was rejected.

Walmart recently reported in its quarterly earnings call that the recent limited operations at Flipkart have negatively impacted the overall growth of the company. E-commerce businesses like Flipkart and Amazon have been deeply impacted due to the lockdown announced by the New Delhi Government in March which restricted e-commerce businesses to only sell essential items and hygiene products and led to a downturn for e-commerce.

Source Credits: https://au.finance.yahoo.com/news/india-rejects-walmart-owned-flipkarts-043947987.html