Flipkart, owned by Walmart is entering the food retail in India, where customers spend about $500 billion on groceries yearly. The newly registered ‘Flipkart FarmerMart’, with an authorised equity capital of Rs 1,845 crore, would sell items produced locally. Sales at first will be online, although the firm can sell through physical stores.
Kalyan Krishnamurthy, Flipkart Group CEO said, “In line with the government of India’s FDI policy that allows 100 percent foreign direct investment in food retail for food produced & manufactured in India, Flipkart is applying for appropriate licences from the government” adding that we have secured all internal approvals for the same.
He added that the entity would focus on food retail & help improve agriculture and food-processing industry in the country.
Krishnamurthy said, “We are looking forward to invest deeply in local agri ecosystem, supply chain & working with lakhs of small growers, Farmer Producers Organisations, food processing industries, helping multiply farmers’ income & bring affordable, quality food for millions of customers across the country”.
It is important to mention that in India, Walmart does not sell directly to customers & is an organised wholesaler or say cash-and-carry operator that sells merchandise to small neighborhood stores, hotels & catering companies. The world’s largest retailer acquired Flipkart in 2017 for $16 billion with the aim to gain access to India’s $670-billion retail market.
Food is the only segment where etailers are allowed to sell directly to people. The government avoided opposition to foreign investment in multibrand retail in the year 2016 to create a food-retailing segment that it said was aimed at generating jobs and helping farmers. But, the government has asked ecommerce companies to keep food-only retailing projects at arm’s length from flagship marketplaces by maintaining separate boards, employees, bank accounts and inventories.
Harsimrat Kaur Badal, Food Processing Industries Minister said “It will give an impetus to sourcing from growers directly & supporting food processing industry. It will increase farmers’ incomes and create jobs”. She told that Flipkart had not yet applied to the Department for Promotion of Industry & Internal Trade.
Top company executives said the newly developed entity got Flipkart board approval to go ahead with its application in September
Walmart competitor Amazon has already committed to invest $500 million over 5 years to sell third-party & own private label food products, sourced & packaged locally, both online & through brick-and-mortar stores. Few months back, it launched 2-hour delivery for fresh products & vegetables.
