FIPB abolition delays FDI from Amazon, Big Basket and Grofers

These companies filed request to open food-only retail stores with DIPP in January

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.

Slaughterhouse ban has no relation to falling buff export: Badal 

Falling buffalo meat exports — which have also hit the meat-packaging and leather sectors — have nothing to do with the crackdown on illegal slaughterhouses in Uttar Pradesh, said Badal.

UP Chief Minister Yogi Adityanath had in March cracked down on illegal slaughterhouses in the state.

“The Supreme Court had categorically said illegal slaughterhouses must be shut down, as these are environmental and health hazards. But, previous governments had not enforced the order because of political reasons,” said Badal.

She also spoke on farmer agitations in Madhya Pradesh and other states. “It is an old issue, inherited by us because of the policies of the past 60 years.” The minister said it was essential to develop the food processing industry to reduce waste. According to official estimates, about 90 per cent of food grain produced in the country was wasted.

Fast tracking 

• Amazon, Grofers, Big Basket had filed applications with the DIPP to open food-only retail stores 
• Collectively they plan to invest more than a billion dollars in food-only retail
• However, approval delayed due to confusion over FIPB getting dissolved over past few months
• Now, all cases to be transferred to various ministries sectoral ministries within the next three weeks
• DIPP will have to take a decision within 60 days