Recently the Government of India has eased the norms for Foreign Direct Investment (FDI) in many sectors including e-commerce. The relaxation of norms in the e-commerce, one of the fastest growing sectors, is likely to have a positive impact on the startup ecosystem in India. As per the report of Icra, a domestic rating agency, the grocery startups would get the maximum advantage from the relaxations.
As per the media reports, the agency said that the poor logistics and lack of storages for agricultural products are the major causes of the inflation. It said that the move would bring more investment into the grocery and allied sectors, which will help to contain inflation.The startup ecosystem has been gaining momentum due to support from the government by relaxing many norms aiming to achieve ease of doing business status. The digital economy participation has been resulting rapid expansion in the e-commerce system in India.
The ease in the norms for the foreign investment in the agriculture and allied sectors would have a positive impact on the agriculture based startups in India. On the contrary, the growth of the internet users and favorable investment atmosphere would boost the e-commerce market in India.
Foreign investors would like to invest in the grocery startups due to high potential, less competition and higher RoI.The schemes like Startup India, Digital India and Stand up India have given enough scope for the entrepreneurs to venture into startups. The relaxations of the FDI in some sectors have created a conducive environment for startups in the e-commerce segment in India.