Amazon Wants Slice of India Food Pie

Amazon has applied to the government to invest $500 million in a wholly owned venture in India that will allow the Seattle-based ecommerce titan to stock locally produced food items and sell them online, becoming the first foreign retailer to enter the segment.

Amazon currently operates an ecommerce marketplace and although India allows 100% overseas capital in such platforms, these entities cannot sell products themselves. The government, in a landmark liberalising policy in the February 2016 budget, allowed 100% foreign investment in retailing of processed foods made in India.

Amazon has filed its application with DIPP .The company plans to invest $500 million over five years and could start selling locally produced food items within six months of obtaining approval.

Amazon's application will be considered a showpiece for the government, which has so far been unable to attract foreign retailers and manufacturers after approving the food-retailing policy aimed at helping farmers and creating jobs.

Only hyperlocal grocery delivery companies BigBasket and Grofers have applied under this category. Walmart Stores Inc was not interested in setting up outlets to sell only thin-margin food stuff and wanted the scope of products to be widened to include non-food items. BigBasket applied late last year to invest Rs.100 crore in the food-retailing venture.

India notified the 2016 budget announcement in June, creating the food only retailing segment and allowing 100% FDI for companies selling locally sourced and produced food items through both brick-and-mortar stores and their online portals.

After the lacklustre response to the showpiece regulation, the government tried to drum up investments by inviting companies including Walmart, Nestle, Heinz and Thailand's CP Foods to seek their feedback and investment plans.

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