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After Amazon, online grocery firm Grofers has received government nod to undertake both online and offline food retail trading in the country.
The food and groceries e-tailer on Wednesday said that it has got the Department of Industrial Policy and Promotion’s go-ahead for its foreign direct investment proposal.
Grofers, which had initially made commitments to invest about $25 million, said that it will be making an additional investment of $40 million.
Last year, the government had allowed 100 per cent FDI in food retail both in brick-and-mortar stores and online, with the condition that the items sold have to be manufactured or produced domestically and not imported.
Grofers was the first company to seek approval under this policy in August last year.
Albinder Dhindsa, Founder of Grofers, said this approval would ensure elimination of multiple layers between the farmer and the end-customer, enabling the company to offer better quality and fresh products at cheaper prices.
“Going a step beyond our initial commitment to the government, we intend to bring in additional capital of $40 million within the next few weeks to expand our business further and grow the market,” he added. The e-grocer will also be launching a wider range of private label products soon.
Food and food products account for 70 per cent of the SoftBank-backed e-grocer’s sales.
Ashneer Grover, CFO, Grofers, said that the approval will allow the company to carry its own inventory and exercise better control over its supply chain. “Between GST and this approval, we foresee costs and compliances being rationalised significantly, thereby permitting us to invest more in improving back-end infrastructure and our value proposition,” he said.
“From an approvals perspective, Grofers is now in a much better position than horizontal e-commerce players and international retailers, who are only permitted to undertake marketplace/B2B wholesale trade businesses in India,” he added.
The company believes that by sourcing directly from farmers it will now be able to offer products at lower prices. The company recently expanded to five new markets — Bhubaneswar, Ranchi, Bhopal, Kochi and Madurai.
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