Flipkart's plan to enter food retail takes a hit

The government has rejected Flipkart’s proposal to enter the food retail business, citing regulatory issues. The latest move will come as a setback to Flipkart, which was hoping to tap into farms to source goods directly from growers and sell it through its platform.

Flipkart FarmerMart had proposed to retail food products made or produced in India through Flipkart and other online and mobile platforms. However, the department for the promotion of industry and internal trade has said that Flipkart Farmer-Mart’s memorandum of association does not permit it to undertake food retail.

The plan was not just to boost food and grocery sales, which is a large chunk of the retail business but also to help farmers produce in line with the demand and assure a certain level of income by sourcing at the farm gate. The move was also seen as a window to enable to Flipkart to enter the physical store format.

There are several e-commerce players such as Amazon and Grofers, which had got government approval to enter the food retail business almost three years ago.