Amazon sets its eyes on food retail in India with a proposed investment of $500mn

Indian government has approved Amazon's proposed $500 million investment in India's food retail segment, according to PTI report. It is a separate investment from the $5 billion which it had already committed to invest in India.

Citing a government official, the news agency said that the Department of Industrial Policy & Promotion (DIPP) — the nodal body for the retail sector — gave the nod at a meeting last week as per which Amazon can open a wholly-owned subsidiary in India to carry out the business of stocking food products and selling them online.

Amazon had applied for permission to bring FDI into the food retail sector a few months ago, but the proposal was held up because of the Centre’s decision to dismantle the Foreign Investment Promotion Board.

The green signal also means some tough competition ahead for existing online grocery stores such as BigBasket and Grofers, who also have applied for permission to bring in FDI into their respective ventures.

Currently, the government permits 100 percent foreign direct investment (FDI) 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 either by opening brick-and-mortar stores, or through an online marketplace.

Apparently, Amazon could also launch its own private label category for the food business, told another executive in the know of things. Currently Amazon offers next-day delivery of food and grocery products in India via Amazon Pantry. It also offers same-day grocery delivery from select retailers through Amazon Now.