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Flipkart to foray into food retail with new entity

The entity is set to apply for a food retail license and has received board approval for the same during last month’s board meeting held in Singapore.

Oct 15, 2019, 03.08 PM IST
E-commerce major Flipkart has registered a new entity Flipkart FarmerMart as the Walmart-owned company prepares to apply for a separate food retailing license soon, regulatory filings show.

The new venture will retail food products, manufactured and produced in India through offline and online distribution and set up infrastructure throughout India for efficiently undertaking retailing of food products in India, according to its Memorandum of Association filed with the Registrar of Companies.

The authorised equity capital of the company is Rs 1,845 crore, according to the regulatory filing.

This newly formed entity has received a board approval to go ahead with its application, a decision which was taken during Flipkart’s board meeting held in Singapore last month, top executives at the company said. This unit can sell only locally produced and packaged food products.

“The board approval to obtain the license is in paving the way for Flipkart to formally submit its food license application,” said a person aware of the matter. Flipkart confirmed the incorporation of the entity.

The new entity was incorporated on October 4 and is structured as “limited by shares”, filings show.

Amazon already has committed to invest $500 million over five years to sell third-party and its own private-label food products, sourced and packaged locally, both online and through brick-and-mortar stores. A few months back, it launched its two-hour delivery service for fresh fruits and vegetables.

Food is the only segment where etailers are allowed to sell directly to consumers.

The Indian government sidestepped the intense opposition to foreign investment in multi-brand retail in 2016 to create a food retailing segment that it said was aimed at creating jobs and helping farmers.

However, the government has asked ecommerce firms to keep its food-only retailing venture at arm’s length from their flagship marketplace business by maintaining separate boards, staff, bank accounts, and inventories.

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