Amazon to foray into India’s online grocery segment

To further push India's thriving online grocery selling domain, the global e-commerce giant, Amazon has applied for a wholly-owned food venture to the government of India that will allow the platform to stock locally produced food items and sell them online.

Amazon has filed for a license with DIPP, which handles foreign investment in retailing and e-commerce, according to a report in The Economic Times.

According to a person with knowledge of this matter, the company plans to invest $500 million over five years and could start selling locally-produced food items within six months of obtaining approval.

With an initial investment of $500 million, Amazon will become the first foreign retailer to enter the segment with the likes of BigBasket and Grofers.

In February last year, the Indian government allowed 100 percent foreign investment in retailing of processed foods made in India, which was aimed at helping farmers and creating jobs. Amazon currently operates an e-commerce marketplace, and although India allows 100 percent overseas capital in such platforms, these entities cannot sell products themselves.

The spokesperson said, "We are excited by the government’s continued efforts to encourage FDI in India for a stronger food supply chain. We have sought approval to invest and partner with the government in achieving this vision."

The government is expected to welcome the request, as it was unable to attract any foreign retailers and manufacturers after approving the food-retailing policy. The report also says that 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” after the lacklustre response for the policy.

Meanwhile, Amazon has been expanding its operations in India to beat rivals like Flipkart and Snapdeal. Last year, Amazon invested majorly in marketing, technology and infrastructure, which led to revenues of Rs 2,275 crore for the year ended March 2016. For the food segment also, its initial investment of $500 million is way more than the combined investment received by BigBasket ($247 Million) and Grofers ($165 Million).