Zomato Parent Eternal Caps Foreign Ownership at 49.5% Amidst Push for Domestic Investment

Zomato Parent Eternal Caps Foreign Ownership at 49.5% Amidst Push for Domestic Investment

In a significant development reflecting India’s evolving startup ecosystem, Eternal, the parent company of food-tech giant Zomato, has decided to cap total foreign ownership in the company at 49.5%. This move comes on the heels of Commerce and Industry Minister Piyush Goyal’s recent remarks emphasizing the need for increased Indian participation in the ownership of domestic startups.

A Push for Indian Ownership

Speaking at the Startup Mahakumbh event, Minister Goyal expressed concern over the dominance of foreign investors in India’s startup landscape. “I only wish they'd had more Indian investors, rather than the foreigners buying off all our startups. And yes, we need more Indian investors into the game,” he said.

His remarks underscore a broader sentiment across the ecosystem that Indian innovation and enterprise should be primarily driven by domestic capital. Eternal’s decision to restrict foreign ownership reflects this growing inclination toward Indian control and influence in major homegrown enterprises.

FDI Rules and Operational Implications

India’s foreign direct investment (FDI) norms prevent majority foreign-owned firms from owning or controlling inventory directly—an important regulatory detail that has impacted e-commerce giants like Amazon and Flipkart. In line with these rules, Eternal’s move to reduce foreign shareholding below 50% enables its group companies, such as Zomato and Blinkit, to comply with inventory ownership regulations.

Blinkit, Eternal’s quick-commerce subsidiary, currently operates under an inventory-light model. The company doesn’t own inventory directly, instead relying on third-party sellers for fulfillment. By realigning ownership, Eternal could potentially reshape its operational strategies in compliance with Indian FDI laws.

Zomato’s QIP Signals Investor Shift

Recently, Zomato’s Qualified Institutional Placement (QIP) worth ₹8,500 crore attracted significant domestic institutional participation. The response helped bring down the company’s foreign ownership below the 50% threshold. This shift is strategic, enabling Zomato to explore inventory-led models, which were previously restricted under FDI norms.

This move is particularly relevant as the company continues to diversify and deepen its logistics and fulfillment capabilities through Blinkit, where speed and control over inventory can make a big difference.

Zepto Follows Suit

Interestingly, this trend is not limited to Eternal. Rival quick-commerce player Zepto, which is reportedly gearing up for its initial public offering (IPO), is also working to increase domestic ownership. Reports suggest that Zepto is planning a secondary share sale to Indian investors to rebalance its cap table ahead of the listing, pushing domestic ownership to the 50% mark.

Startups Rethink Domicile and Compliance

The Eternal board’s move is part of a larger pattern among Indian startups reassessing their legal domiciles and ownership structures. With India’s IPO pipeline strengthening and the regulatory environment becoming increasingly supportive, many startups are contemplating relocating back to India from overseas jurisdictions.

This trend is not just about compliance—it also aligns with a rising wave of nationalist sentiment encouraging Indian control of domestic assets and intellectual property.

The Bigger Picture: Easing FDI in Key Sectors

While there's a push to promote domestic investment, the Indian government has also been liberalizing FDI norms in key sectors to attract global capital. For instance, it now allows 100% FDI in insurance companies, showing a nuanced approach where domestic control is promoted in strategic areas like technology and e-commerce, while foreign capital is welcomed in sectors needing deep financial input.

Conclusion

Eternal’s decision to cap foreign ownership in Zomato at 49.5% marks a pivotal shift in how Indian startups are approaching ownership, compliance, and market readiness. With both regulatory clarity and nationalist sentiment pushing for Indian-led innovation, the move could set a precedent for other startups to follow. As IPO momentum builds and investment patterns evolve, this could be the beginning of a more Indian-owned digital economy.