Source: Business Standard, June 14, 2017
New Delhi: The Foreign Investment Promotion Board (FIPB) was dissolved to expedite approvals for foreign direct investment (FDI) proposals — but, it seems to have had the exact opposite effect for food retail.
Amazon, Big Basket and Grofers, collectively planning to invest $1 billion in food-only retail in the country, had filed applications to do so in January. They are yet to receive approvals.
“With with the FIPB dissolved, there has been a little delay,” said Food Processing Minister Harsimrat Kaur Badal on Tuesday.
The FIPB has had no meeting since the Union Budget was presented on February 1. The decision on who would approve FDI proposals in its absence — ministries and departments concerned — was taken only late last month. Badal said the approvals would be given soon.
The government has allowed full FDI in food-only retail, including multi-brand and e-commerce. The products, however, have to be produced, processed or made in India.
These companies (Amazon, Big Basket and Grofers) have already selected space for stores and worked out the number of employees they would need. “The blueprint for our offline plan is ready; our back-end is in place,” a senior vice-president of one of these companies told this newspaper.
Amazon has already committed to invest $515 million (about Rs 3,000 crore). Had the FIPB been around it could have been able to approve it. The proposal will now be approved by the Department of Industrial Policy and Promotion (DIPP). It will have 60 days after three weeks to take a call.
The food retails space has, however, found few takers among foreign investors, who have said it’s not really a viable business. Walmart and Auchan have said they are interested only if they are allowed to sell household items along with food.
While the Ministry of Food Processing Industries is in favour of allowing retailers to have 25 per cent of their shelf space dedicated to non-food items, DIPP and the finance ministry demurred.
Badal said a decision will be taken on this before the mega food festival scheduled in November.