Walmart-owned Flipkart is all set to venture into the food retail business in India with its newly registered brand, ‘FarmerMart’. The new branch has an authorized equity capital of Rs 1,845 crore.
The company has planned to buy goods from local markets. Initially, they will be sold online, however, there are chances that the company will open physical retail stores as well.
Currently, the company is in the process of applying for the required licenses from the government, media reports stated.
As per India’s Foreign Direct Investment (FDI) policy, the government allows 100% FDI in food retail industry for the food produced and manufactured in India. This is aimed to help the agricultural as well as the food-processing industry of the country.
Only 0.2 per cent of India’s grocery market is online, but reports show that the stats are increasing by 50 per cent on an annual basis. So far, local stores have dominated the segment, followed by online stores like Grofers and Bigbasket. But, e-retailers like Amazon, Flipkart as well as Swiggy are making inroads.
In India, Walmart does not sell directly to consumers. Therefore, to extend its reach and to make its way through the $670 billion retail market, it acquired Flipkart for $16 billion in 2017.
With an aim to beat Amazon in the segment, the world’s largest retailer has committed to invest $500 million on the third-party, private label food items-all sourced and packaged in India, media reports stated.
Annually, Indians spend around $500 billion on their groceries. The numbers are expected to rise in the coming decade as the online grocery section is expected to grow up to $99 billion.
(With input from agencies)