The Centre is processing the foreign direct investment (FDI) proposals submitted by online grocery stores Grofers and BigBasket, and is likely to approve them soon, a government official has said.

This would stiffen competition for US-based online retail giant Amazon, which on Monday received permission to enter the food retail space in India.

“The Department of Industrial Policy and Promotion (DIPP) had started the approval process for FDI proposals by Grofers and BigBasket simultaneously with that of Amazon’s. While the Amazon proposal has just been approved, it is just a matter of time before the other approvals follow,” a DIPP official told BusinessLine .

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 procured from within the country and not imported.

The DIPP had received three applications following the opening up of the sector — from Amazon and domestic online grocery marketplaces Grofers and BigBasket.

“Since the DIPP approved Grofers’ and BigBasket’s proposals when the Foreign Investment Promotion Board was still in place, giving fresh approvals under the new dispensation after the dismantling of FIPB is not a complicated process,” the officials said. Under the new regime, line-ministries (DIPP in case of retail) have the responsibility of clearing FDI proposals that are not under the automatic route.

However, even in the case of previously approved proposals, fresh approvals could take some time as the Standard Operating Procedures (SOP) for appraising proposals are different.

“The procedural requirements and documents to be submitted by entities seeking FDI are different from before. Therefore, the proposals approved under the previous set-up cannot be automatically given the go-ahead, and a fresh assessment needs to be done,” the official explained.

While Amazon’s FDI proposal is worth $500 million, Grofers’ and BigBasket’s proposal, together, would add up to $195 million.

For Grofers and BigBasket, which are already in the online food retail business, the FDI would help in expanding their presence and fight the intense competition that Amazon, a global leader in e-commerce, would provide.

comment COMMENT NOW