Government permits 100% FDI in food retail
Giving a major boost to retailers and grocery startups such as Bigbasket and Grofers, the Indian government in June 2016 allowed 100% foreign direct investment (FDI) in food retail, including via e-commerce, provided such products are produced, processed or manufactured in India.
Permission for B2C food retail operations
The move will allow multi-brand retail players such as Walmart to begin operations in B2C food retail. Till now, the US giant was only running a B2B food business with a strong backend infrastructure, since FDI in multi-brand retail was hitherto not allowed in India. Similarly, it will also help Indian hyper-local grocery startups like Grofers and BigBasket to raise funds more easily. According to a certain Walmart official, the 100 % FDI permit will help to minimize food wastage, help in farm diversification and encourage industry to produce locally in the country.
FDI only on food items
The government’s move allows FDI only in retailing of food products, while most grocery startups sell household items such as soap and incense sticks, besides food. Hence, they will have to separate the food business from the remaining portfolio to raise additional funds easily from foreign players.