In a major reform that is said to benefit the farmers and agriculturists, the central government has given its nod for the retailing of food products in the country.
In June 2016, the government had allowed 100 per cent FDI in multi-brand food retail, including through e-commerce. However, the food products have to be produced, processed or manufactured in the country.
It is said that the opening up of food retail will benefit farmers as the middlemen will be eliminated. Middlemen are often blamed of eating up farmers’ earnings and controlling the market prices.
The government expects the organised retailers to source directly from the farmers.
E-commerce players baking the idea!
Now, US based retail giant Amazon’s $500-million investment in food retail is likely to get the green signal.
The centre has received investment proposals from three companies–Amazon, Grofers and Big Basket.
With the abolition of the Foreign Investment Promotion Board (FIPB), Amazon’s proposal will now go to the Department of Industrial Policy and Promotion (DIPP) under the commerce ministry.
Union Food Processing minister Harsimrat Kaur said “There was some delay due to the abolition of the FIPB. Amazon’s proposal will soon be cleared”.
‘Only food is not exciting’
Food roughly occupies nearly Rs 4 lakh crore of business of the total Rs 30 lakh crore of retail economy in India.
The opening of opportunity in food retail has not excited the international players who complain that having “food only” stores may not be viable.
To make the business viable, they want to retail soaps and shampoos under the same facility. This demand is pending with the government.
However, the ministry of food processing may allow the retailers to sell non-food items that may occupy 25 per cent of the shelf space.