Amazon is all set to get the DIPP approval to invest proposed USD 500 Mn in a wholly-owned food retail venture in India, over a five-year period. After the approval, Amazon can then stock locally produced food items and sell them online. This will further strengthen Amazon’s plans of opening food retail stores in India. Hyperlocal online grocery retailers Bigbasket and Grofers had also applied for approvals under this category.
Exactly an year after, the government allowed for 100% Foreign Direct Investment in Food Retail in India, Amazon made an investment proposal in Feburary 2017. Back in July 2016, Amazon India launched Amazon Pantry, offering grocery and household essentials and even delivers orders in a day. It aims to replicate the supermarket model online, that can deliver products up to 15 kgs per delivery. Also, Amazon Pantry will be accessible to all customers in India and not just prime customers. Prior to that, in February 2016, Amazon launched its grocery delivery app in India, Amazon Now, to allow users to order everyday essentials.
The online food retail space in India has seen a lot of ups and dows lately but that hasn’t deterred the players to try their luck. Walmart announced its plans to open about 50 new stores in Uttar Pradesh and Uttarakhand over the next three-to-four years.
Food Minister Harsimrat Kaur Badal has said in a statement:
“FDI inflows help bring new technologies, products, processes, and markets. Also, foreign investments in backward and farm-gate infrastructure in the supply chain would benefit farmers and processors, and create employment.”
- The Indian food and grocery market is the world’s sixth largest, with retail contributing 70% of the sales.
- The Indian food retail market is expected to reach $915 Bn (INR 61 Lakh Cr) by 2020.
- The Indian food processing industry accounts for 32% of the country’s total food market, and is ranked fifth in terms of production, consumption, export and expected growth.
- The Confederation of Indian Industry (CII) estimates that the food processing sectors have the potential to attract as much as $33 Bn of investment, over the next 10 years.