Amazon gets govt nod to retail food in India

Amazon will soon enter the highly profitable food retailing business in India with the government approving the US e-commerce major's proposed $515-million investment in retailing of food products in the country.

Reports quoting official sources said, Amazon's proposal, which was hanging fire at the Foreign Investment Promotion Board (FIPB), has now been cleared after the government scrapped FIPB.

The Department of Industrial Policy and Promotion (DIPP) under the commerce ministry has given the green signal to the proposal.

As per the proposal, the Seattle-based e-tailer will open a wholly-owned subsidiary in India to carry out the business. It will open brick-and-mortar outlets to stock food apart from an online portal.

The new business unit will sell third-party or Amazon's private labels of locally-produced and packaged food products.

Singapore-based Amazon Corporate Holdings Pvt Ltd holds 99 per cent of the proposed entity and the remaining 1 per cent is owned by Amazon.com Inc, Mauritius.

Amazon, already the number two player in India's fast-growing e-commerce market, hopes to expand its presence in the country with retailing of food.

The government permits 100 per cent foreign direct investment in the food processing sector. As per norms, a foreign company can open a wholly-owned subsidiary in India to retail food products produced and or manufactured in the country by way of opening stores or online.

The government had received investment proposals from three companies - Amazon, Grofers and Big Basket - worth $695 million for retail of food products.

While US-based retail giant Amazon is one of the major e-commerce players in India, Grofers and Big Basket are into online grocery space.

Amazon's first brick-and-mortar grocery store, under the brand name Amazon Go, is scheduled to launch in Seattle, US, soon. The Amazon Go stores are designed such that there are neither checkout lines nor cashiers. Shoppers just need to scan their Amazon app when entering the store and shop even as the company's proprietary 'Just Walk Out' technology tracks users' virtual carts. Payment is automatically facilitated through customers' Amazon.com accounts.

It's not clear if Amazon would bring the same concept to its proposed physical stores in India.