Flipkart will try again for a ‘Made in India’ tag to be able to sell farm produce

• Walmart-owned Flipkart had applied for a license to run Flipkart FarmerMart – a food retail entity that would sell agricultural produce of Indian farmers online.
• The company had applied for the license when 100% FDI in food retail was allowed.
• However, since then the government’s guidelines for food retail have changed.

Walmart-owned Flipkart had applied for a license to run Flipkart FarmerMart – a food retail entity that would sell agricultural produce of Indian farmers online. However, the Department for Promotion of Industry and Internal Trade (DPIIT) has rejected the application saying that the Flipkart FarmerMart would flout the regulatory guidelines.

However, Flipkart intends to reapply for the license.

“At Flipkart, we believe that technology & innovation driven marketplace can add significant value to our country’s farmers and food processing sector by bringing value chain efficiency & transparency. This will further aid in boosting farmers’ income & 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.” said a Flipkart spokesperson.

According to the government, any e-commerce platform with foreign direct investment can simply be the platform for the third party sellers to reach out to buyers, but it cannot sell inventory of its own. TOI reported that the Flipkart FarmerMart’s memorandum of association would not allow it to enter food retail.

“In line with the government of India’s FDI (foreign direct investment) policy, which allows 100% FDI in food retail for food produced and manufactured in India, Flipkart is applying for appropriate licences from the government,” Flipkart Group CEO Kalyan Krishnamurthy had said in October 2019.

However, since then the government has changed the guidelines, which put Flipkart’s new venture in danger.

Flipkart had announced its entry into fresh produce last year when it began piloting the same in Bengaluru and Hyderabad.

The development comes just days after Flipkart’s rival Amazon has announced its entry in food delivery in India.

Flipkart, founded in 2007, has been a Singapore-registered entity since 2011 and is today owned by US retail giant Walmart. The US retail giant owns a 77% stake in Flipkart, which it acquired in 2018 for a whopping $16 billion

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