ARTICLE · 22 SEPTEMBER 2016

Government Considering Permitting Foreign Direct Investment In Food E-Tailers

India Juris

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The Government of India is mulling to allow fFDI in online retailing of food products. Discussions regarding expansion of definition of food to include grocery also took place at a recent meeting of senior Government officials and industry officials.

IndiaGovernment, Public Sector

India Juris

The Government of India is mulling to allow foreign direct investment (FDI) in online retailing of food products. Discussions regarding expansion of definition of food to include grocery also took place at a recent meeting of senior Government officials and industry officials.

The objective of the budget proposal for foreign investment in food retail was primarily to benefit the food processing industry and farmers. However, food earns one of the lowest margins for retailers, an issue that has been plaguing the industry.

Within online, fresh produce accounts for almost 20% for BigBasket and as much as 30% for Grofers, while packaged food products contribute another 35-40% of total sales (Bigbasket and Grofers are among the largest food e-tailers in India). While selling food products would help farmers and small business, retailers will have to look at other groceries and household products to earn profit and remain sustainable.

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