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NRAI for indirect regulation of online food delivery cos, open to making a pact

The National Restaurant Association of India is opposed to online food delivery platforms having exclusive tie ups, “arm twisting, promoting their own brands, using their own (search) algorithms,” reports Financial Express. The NRAI said that it would like a code of conduct to be implemented to deal with deep discounts, the ‘dumping of capital’ and perpetually on-sale items influencing market forces.

MediaNama has reached out to the NRAI, Zomato, Swiggy, Foodpanda, and UberEATS and will update this when we hear from them.

The report states that the NRAI wrote to the DIPP, now renamed the Department for Promotion of Industry and Internal Trade (DPIIT), asking if online food delivery companies fell under the new FDI in ecommerce policy.

  • The association is of the belief that they do, but had not defined themselves as marketplace or inventory based companies, and that some of them weren’t registered with FSSAI either.
  • “If food aggregators start to flex their muscles because of the capital they have, then we need a code of conduct… If we can have a code between the aggregators and the association, we would be happy,” NRAI president Rahul Singh told FE.
  • The NRAI is contemplating going to the CCI with this.

Last month, the NRAI met with online food delivery companies, where it asked whether deep discounting was turning users into discount addicts and voiced its concerns. The association represents restaurants like Smoke House Deli, The Big Chill Cafe, The Bombay Canteen, Punjab Grill, Burger King, ABC Farms, Baskin Robbins, Social etc.

https://www.medianama.com/2019/01/223-fdi-in-ecommerce-new-government-rules/

The spread of online food delivery companies

  • Last month, Swiggy raised $1 billion in funding led by Naspers, with participation from new and existing investors. It has 120,000 delivery personnel and claims to have 50,000 restaurant partners across 50 cities. In the last 6 months, Swiggy has expanded to 26 new cities.
  • In the same month, Foodpanda became available in 100 cities, with its own delivery personnel. Foodpanda currently claims to have over 60,000 restaurants on its platform, with the aim to double this number by January 2019. (Wow!)
  • Zomato launched in 30 more cities, taking its total presence to 93 cities. It claims to have 75,000 listed restaurants for food delivery, and will add 5,000 more delivery personnel.
  • In May, Uber said that within a year of operations from Mumbai in May 2017, UberEats had 12,000 restaurants. At the time, 40 new restaurants were being added daily. UberEats is available in 13 cities in India and now seems to be available in 14 more.

Online vs offline

In India, the pushback against online companies “disrupting” traditional businesses has been visible across multiple sectors ranging from ecommerce and retail, and sometime governments, online cab hailing to taxis, e-pharmacies and brick & mortar ones, online streaming services and TV and telcos, to name a few. Read Nikhil’s article on this from 4 years ago, which outlines some of stands industries have been taking for 4-5 years now, and what to do moving ahead:

https://www.medianama.com/2015/06/223-online-offline-battle-india/

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