The Indian authorities has rejected Flipkart’s proposal to enter the meals retail enterprise in a setback for Walmart, which owns majority of the Indian e-commerce agency and which not too long ago counted its enterprise in Asia’s third-largest economic system as one of many worst impacted by the worldwide coronavirus pandemic.

The Division for Promotion of Trade and Inner Commerce (DPIIT), a wing of the nation’s Ministry of Commerce and Trade, instructed Flipkart, which competes with Amazon India, that its proposed plan to enter the meals retail enterprise doesn’t adjust to regulatory pointers — although it didn’t elaborate, in response to an individual acquainted with the matter.

Rajneesh Kumar, chief company affairs officer at Flipkart, instructed TechCrunch that the corporate was evaluating the company’s response and meant to re-apply.

“At Flipkart, we imagine that know-how and innovation pushed market can add vital worth to our nation’s farmers and meals processing sector by bringing worth chain effectivity and transparency. This may additional assist boosting farmers’ earnings & remodel Indian agriculture,” he added.

Whereas asserting the plan to enter the nation’s rising meals retail market, Kalyan Krishnamurthy, Flipkart Group CEO, mentioned in October final yr that the corporate deliberate to take a position $258 million within the new enterprise.

Flipkart deliberate to take a position deeply within the native agriculture-ecosystem, provide chain, and work with tens of 1000’s of small farmers, their associations, and the nation’s meals processing trade, Krishnamurthy mentioned. The meals retail unit would assist “multiply farmers’ earnings and produce reasonably priced, high quality meals for tens of millions of shoppers throughout the nation.”

A number of e-commerce and grocery companies in India, together with Amazon, Zomato, and Grofers, have beforehand secured approval from New Delhi, which presently permits 100% overseas direct funding in meals retail, for getting into the meals retail enterprise.

A Flipkart govt, who didn’t need to be recognized, mentioned they have been “at a lack of phrases” to evaluate on what floor their software was rejected.

Meals and grocery are compelling classes for e-commerce companies in India because it permits them to have interaction with their prospects extra continuously. In response to analysis agency Forrester, India’s on-line meals and grocery market stay considerably tiny, accounting for simply 1% of the general gross sales.

In the newest quarterly earnings name, Walmart mentioned restricted operations at Flipkart had negatively affected the group’s total progress. New Delhi introduced one of many world’s stringent lockdowns throughout the nation in late March that restricted Amazon and Flipkart from delivering in lots of states and solely promote “important gadgets” corresponding to grocery and hygienic merchandise.

India maintains the stay-at-home orders for its 1.Three billion residents, although it has eased some restrictions in latest weeks to resuscitate the economic system.

Correction: An earlier model of the story mentioned that India had revisited its guideline surrounding overseas direct funding for meals retail enterprise. That’s not the case.

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