Amazon India proposes $500m food venture

Amazon India has applied to the government to invest US$500 million in a wholly owned venture that will allow the US eCommerce giant to stock locally produced food items and sell them online.

If successful, it would become the first foreign retailer to enter the segment.

Amazon already has an eCommerce marketplace in India, but while 100 per cent overseas capital is permitted for such platforms, they cannot sell products of their own. Last year, the government allowed for 100 per cent foreign investment in the retailing of processed foods made in India.

Amazon has filed its application with the Department of Industrial Policy & Promotion (DIPP), which handles foreign investment in retailing and e­Commerce. The company plans to invest $500 million over five years and could start selling locally produced food items within six months of obtaining approval, says an insider.

“We are excited by the government’s continued efforts to encourage foreign direct investment in India for a stronger food-supply chain,” says an Amazon spokesperson. “We have sought an approval to invest and partner with the government in achieving this vision.”

Only Indian grocery delivery companies Big­Basket and Grofers have applied under
the category, prompting the government to invite companies including CP Foods (Thailand), Heinz, Nestle and Walmart to provide feedback and investment plans.

This followed the minister for food-processing industries Harsimrat Kaur Badal visiting London with a team of officials last year to meet representatives of such companies as Cobra Beer, Harrods, Marks & Spencer, Sainsbury’s and Tesco to drum up support for the policy.

Amazon’s current online platform is open to Indian-­owned entities, and similar platforms are run by Flipkart, the country’s largest eCommerce company, and Snapdeal.