wordpress blog stats
Connect with us

Hi, what are you looking for?

FDI in food retail will help online groceries to raise funding — but there’s a catch

cc-grocery

First, the good news. Government’s decision to allow 100% foreign direct investments (FDI) in single brand retail is likely to give a big boost to online grocery startups such as Grofers and BigBasket as they can now raise funds more easily than before, according to the Times of India.

Now, the bad news: the government has allowed FDI only in food retail. Most startups in the grocery delivery segment also sell other household items such as soap, shampoos, cleaning agents etc. Hari Menon, CEO of Bigbasket, told the newspaper that they would even consider separating the food business from the rest of the portfolio to attract more investments from foreign players.

BigBasket raised $150 million in March in a round of funding led by Abraaj Group with participation from International Finance Corporation and Sands Capital. While Grofers raised $120 million in November 2015 in a round of funding from SoftBank, Russian entrepreneur Yuri Milner, with participation from existing investors Tiger Global and Sequoia Capital.

Downturn in online grocery: The online grocery delivery business has seen a downturn over the past few months. In April, PepperTap, which had raised $51.2 million, shut its grocery delivery business entirely and pivoted to logistics. This was shortly after the company closed operations in six cities.

Grofers shut down its services in nine cities because of low acceptance, while LocalBanya’s website has been down for over nine months now.

In February, Ola shut down its food and grocery delivery businesses Ola Cafe and Ola Store, while Flipkart shut down its grocery delivery service Nearby, five months after its launch. While the anomaly of the lot was Amazon India which launched a grocery delivery service app in Bangalore in February.

Walmart and Carrefour: Allowing 100% FDI in single brand retail would also enable multi-brand retailers such as WalMart and Carrerfour to setup a consumer-facing website to sell food items. But the products must be produced, manufactured or processed inside the country. Walmart in India has a B2B business and has 21 stores across Andhra Pradesh, Maharashtra, Punjab, Madhya Pradesh, Telangana, Uttar Pradesh and Chhattisgarh.

Image credit: Flickr user Lars P under CCBY.20

You May Also Like

News

Between January and June 2020, Twitter received 12,700 information requests from governments and law enforcement agencies around the world, reflecting a significant increase of...

News

Between January and June 2020, governments and law enforcement agencies in India sent 2,613 information requests to Twitter , more than thrice the amount...

News

The Federation of All India Vyapar Mandal (FAIVM), a pan-India body of traders and retailers, has recommended that the government impose a tax of...

News

We missed this earlier.  In a joint submission to the Labour Ministry, a group of 23 trade unions, civil society organisations and members of...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to Daily Newsletter

    © 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ