Earlier this week, the Indian Government permitted 100% FDI in food retail, including retail through ecommerce.
The move was made in a bid to strengthen the sector, provided these items are produced, processed or manufactured in the country.
This will allow multi-brand retail giants such as Walmart to look at their food business, in India, closely and perhaps even foray into B2C food retail. Also, it will help Indian hyperlocal grocery startups, like Grofers and BigBasket etc. raise funds easily.
A Walmart India spokesperson, told ET, “The decision by the government to allow up to 100% foreign direct investment (FDI) through FIPB in marketing of food products produced or manufactured in India, including through ecommerce, is very progressive and will help in reducing wastage, helping farm diversification and encourage industry to produce locally within the country. This far-reaching reform will benefit farmers, give impetus to food processing industry and create vast employment opportunities. We will study the policy document when government finalises and issues it.”
The government expects the new policy to curb food wastage. Food processing minister Harsimrat Kaur Badal has been rooting for FDI in the sector citing heavy food wastage. She said India has been wasting food and agricultural produce worth INR 92,000 Cr and foreign funds can build infrastructure at farm gate level for benefit of farmers.
Majorly the move will help the hyperlocal players to expand rapidly in tier-II and tier III cities as last mile connectivity and high fulfillment costs can be met by the new inflow of capital.