Several EU countries criticised the proposed law, saying it would break EU single market rules by discriminating against imported products.
ADVERTISEMENTCzech lawmakers have rejected a proposal to force supermarkets to have a mandatory quota on locally produced food.
The proposed law would have come into effect in 2022 and meant the percentage of Czech food sold in large supermarkets would have to be at least 55%.
This would rise to at least 73% in 2028, in stores larger than 400 square metres.
The lower house of the Czech Parliament had initially approved the legislation in January, in an effort to reduce dependency on food imports.
But after MPs in the Czech Senate - the upper house of Parliament - dismissed the bill last month, lawmakers also vetoed the amended proposals on Tuesday.
The law had been suggested by the opposition populist Freedom and Direct Democracy party, who argued that the pandemic had shown that the Czech Republic needed to be self-sufficient in food production.
The move could also boost local agriculture, applying to 120 foods, including pork, beef, milk, honey, and vegetables produced in the country.
However, eight other European Union countries, including Germany and France, had strongly criticised the proposed "Food Act".
The European Commission stated the bill would break EU single market rules by discriminating against imported products.
The rejection of the law was also welcomed by the Czech Confederation of Commerce, which argued it would reduce competition in supermarkets.