The government has dismissed Flipkart's application for a food retail permit.The organization however said that it plans to reapply after assessment.
The Department for Promotion of Industry and Internal Trade (DPIIT) sent a letter to the organization a week ago expressing that the application has not gone through, sources said.
A source at DPIIT said Flipkart's application didn't fit into the current FDI rules.
Flipkart had applied for a food retail permit not long ago after it had set up a different entity for the purpose called Flipkart FarmerMart before the end of last year. Reports propose Flipkart was hoping to put Rs 2,500 crore into the food retail business.
A company spokesperson in a statement said:
“At Flipkart, we believe that technology and innovation driven marketplace can add significant value to our country’s farmers and food processing sector by bringing value chain efficiency and transparency. This will further aid in boosting farmers’ income and transform Indian agriculture.
We are evaluating the department’s response and intend to re-apply as we look to continue making a significant impact on small businesses and communities in India.”
Flipkart's rival Amazon had received a food retail licence in 2017 after the government had allowed 100 percent FDI in food retail.
As of now, the legislature permits 100 percent FDI into the food retail. A comparative activity has been attempted by Amazon's retail vertical, Amazon Retail India Pvt. Ltd subsequent to getting an administration gesture in 2017. Up until this point, Amazon has put about $500 million in its food retail initiative and illustrated its arrangements to open a homestead assortment focus in Pune.
Different organizations including Zomato, Grofers have additionally received the administrative sanction from the Department for Promotion of Industry and Internal Trade for their food retail activities. Be that as it may, the specialists are carefully observing the tasks of these organizations to check there are no infringement in holding fast to the rules of going about as only commercial centres for selling items from outsider dealers.
Strikingly, Amazon set on the food retail path back in July 2017 and has since been contributing to assemble it as its staple business.
Flipkart, however late to the gathering, was hoping to get an endorsement in two-three months of having applied for it.