ETtech Explainer: Why is Zomato parent Eternal capping foreign ownership at 49.5%?

Zomato and Blinkit’s parent company, Eternal, is reworking its ownership structure to become a domestically controlled entity. The company’s board has proposed capping foreign ownership at 49.5%—a move that paves the way for its quick commerce arm, Blinkit, to move away from a pure marketplace model and start holding inventory directly.

What changes for Eternal and Blinkit?

By becoming a majority Indian-owned company, Eternal can now follow a different set of rules that allow more flexibility.

As of March 31, Indian investors, including mutual funds, financial institutions and retail shareholders, owned 55% of Eternal. That means the company now qualifies as an Indian-owned-and-controlled company (IOCC) under Indian law.

While the proposal still needs shareholder approval, the strategic rationale is clear: more control, more categories, better margins.

Why is this important?

Under India’s foreign direct investment (FDI) rules, online shopping platforms with majority foreign ownership aren’t allowed to stock their own products. That’s why most quick commerce companies—like Blinkit—have to rely on third-party operators to run the dark stores where products are stored and shipped from.

Now that Eternal is majority Indian-owned, Blinkit can:

• Stock and sell its own products.
• Launch new product categories, especially where there are very few Indian brands (like toys, festive items, and gourmet food).
• Support small Indian manufacturers by helping them with working capital or by buying directly from them.
• Make better margins, especially in unbranded or fast-moving consumer goods (FMCG) categories.

So, why now?

This shift comes after Eternal (then Zomato) raised Rs 8,500 crore in November 2024 through a qualified institutional placement (QIP), mostly from domestic mutual funds. That capital raise helped swing its ownership majority in favour of Indian investors, enabling the IOCC transition.

It also comes amid increased regulatory attention on how quick commerce platforms are structured. ET reported in January that senior executives from Blinkit, Swiggy Instamart, Zepto, and Bigbasket met government officials to explain the operational nuances of quick commerce, as authorities sought clarity on whether the model aligned with ecommerce norms.

The pressure wasn’t just from the government. Trade bodies like the Confederation of All-India Traders (CAIT) have accused quick commerce firms of using foreign capital to distort local retail markets—adding another layer of urgency for players to localise their ownership and operations.

Is this part of a larger shift in quick commerce?

Eternal is not the only company making changes to meet Indian foreign investment rules. Zepto, a key rival to Blinkit, is also working to increase Indian ownership. The company raised $350 million in late 2024 from Indian high-net-worth individuals (HNIs), family offices, and institutional investors. It is now in talks to raise another $250 million, which would further help it qualify as an Indian-owned company.

This shift isn’t just about following regulations; owning inventory gives companies more control. For example, they can launch private labels, offer a wider range of products, and improve profit margins. Others like FirstCry have also capped foreign ownership at 49.5% to comply with local rules and grow their online retail businesses.

Omnichannel beauty and fashion retailer Nykaa, with around 52% domestic ownership as of March 2025, has also operated on an inventory model that leads to enhanced customer experience.

How does this help Blinkit?

Blinkit now has more freedom to grow and improve its business. Eternal said the new structure will help in two big ways:

• Category expansion: Blinkit plans to tap into underserved verticals—gourmet foods, home décor, seasonal items—by either supporting small Indian brands financially or stocking goods itself.
• Margin improvement: Taking inventory in-house allows Blinkit to optimise pricing, logistics, and sourcing—leading to better gross margins, especially in categories where fragmentation limits seller scale.

In an earlier ET interview, Blinkit’s CEO, Albinder Dhindsa, acknowledged that quick commerce is still working its way toward profitability. “There’s a general thinking that this segment will be profitable because customers are willing to pay for this level of convenience, but it’s still early days,” he said.

On the capital raise, Dhindsa said the company acted pre-emptively. “We felt that if others could raise money, the market leader should be able to do the same,” he noted. “There seemed to be some irrationality in the market… and we believed that our raising money would bring some rationality back.”

Read our in-depth coverage on quick commerce:

• ETtech Q&A | Zomato CEO Deepinder Goyal on food delivery slowdown, quick commerce burn and more
• Spurring food delivery growth, keeping discipline intact for Blinkit key: Zomato CEO Deepinder Goyal
• QSR brands riding on qcomm wave with customised offerings
• Blinkit, Zepto hike commissions to boost per-order earnings
• Quick commerce gears up for a busy summer of ice creams and ACs
• With its bottomline under pressure, Blinkit shifts to variable commission rates for sellers