Online grocery firm Grofers today said it has received government nod for retailing food products in India and will invest $40 million to expand operations in the country. Grofers was the first company to seek in August last year approval under the new policy notified by the Department of Industrial Policy and Promotion (DIPP), it said. Also Read - E-commerce rules draft dos and dont’s: No more flash sales on phones, other goods and moreAlso Read - Ola to offer free oxygen concentrators to the needy
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“Going a step beyond our initial commitment to the government, we intend to bring in an additional capital of $40 million within the next few weeks to expand our business further and grow the market,” Grofers founder Albinder Dhindsa said in a statement.
This approval will go a long way in promoting the grocery retail business in India, he added. The company is expected to use the funding to set up processing centres near and is as well as bring in private labels for products as it looks to expand its play in the online grocery segment in the country.
The government had received investment proposals worth $695 million from three companies — Amazon, BigBasket and Grofers after 100% FDI was allowed for retailing food products manufactured and produced in India. While Amazon alone accounted for over $500 million of this, Grofers is believed to have sought approval for FDI worth about $25 million. Amazon received DIPP approval for its proposal earlier this month. Grofers could seek approvals for bringing in more FDI at a later date. ALSO READ: Battle for BigBasket gets hotter as Alibaba joins the fray: Report
Dhindsa said Grofers will now be able to “provide even lower prices for its customers while ensuring farmers get more value for their products and a steady flow of income”. It will impact the farmer community in a positive manner and help generate employment in rural and semi-rural areas. It will also help reduce wastage and create a direct-line from farmers in the food supply chain, he added. ALSO READ: Amazon gets government nod for proposed $500 million investment in food retail in India
“Food and food products account for 70% of Grofers’ sales. This approval would ensure elimination of multiple layers between the farmer and the end customer, ensuring better quality and fresher products at cheaper prices,” Dhindsa said.