Retail major Walmart has plans to avoid investing in the food-only retailing business in India in the near future.
According to an exclusive report of The Economic Times report, which cited people familiar with the matter that the US-based retailer plans to sell food products through third-party retailers. Products would be sold through the Flipkart online platform to avoid government scrutiny, as there are conditions related to the foreign direct investment of up to 100% in the food-only related business.
A person familiar with the matter was quoted by the financial daily as saying: “It doesn’t make sense to sell only food either through brick-and-mortar or through online. With all those riders, it is even harder to do it.
“Walmart would rather handle the back-end of the food and grocery and that will help it escape the scrutiny and riders associated with food FDI retailing.”
Its competitor, Amazon, has had it tough in the Indian market and received government approval only last year for a completely owned food retailing unit, which is yet to commence operations.
The government had asked the Seattle-based online retailer to separate its equipment, machinery and warehouses for the food retailing business from its flagship business Amazon.in.
Last month, Walmart signed a definitive agreement to acquire a 77% stake in Flipkart Group for $16bn.
Following the completion of the deal, Walmart would become the largest shareholder in Flipkart.
Commenting on the investment, Walmart president and chief executive officer Doug McMillon had then said: “India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of eCommerce in the market.”
Walmart India also operates 21 Best Price cash-and-carry stores and one fulfilment centre in 19 cities across nine states, with more than 95% of sourcing from the country.