Amazon-owned Flipkart has been blocked from entering the food-retail business by Indian regulators who had deliberated for almost a year on an application.
Subsidiary Flipkart FarmerMart had applied to sell foodstuffs grown or manufactured in India online via its marketplace and on apps. However the company was told by the Department for Promotion of Industry and Internal Trade (DPIIT) marketplace, it cannot add food to its platform as a foreign-owned retailer.
Foreign direct investment in retail has long been a controversial issue in India and only in the last several years have multinational retail giants been allowed to enter the market, usually with strict requirements for a proportion of goods they sell to have been manufactured in India.
The government has recently tried to tighten laws to ensure companies like Amazon only act as third-party marketplaces, allowing local companies to sell on its platforms, rather than develop their own inventories and become retailers in their own right.
Flipkart had, however, been hoping to form supplier alliances with farmers and growers to create its own brands – rather than import all of the products it would sell.
Establishing such strong supply agreements would also potentially have helped Flipkart expand into the brick-and-mortar retail market.