NEW DELHI: Amazon has sought government approval to invest $515 million (Rs 3,370 crore) in India over five years as the e-commerce giant seeks to enter food retailing through its online portal as well as brick-and-mortar outlets.
Food processing minister Harsimrat Kaur Badal on Thursday announced plans from Germany’s Metro and homebred online grocery sellers Grofers and Bigbasket to bring in foreign investment into food retailing, where India in June last year lifted restrictions on overseas funding.
The government move was aimed at giving an impetus to the farm sector.It expects organised retail to source directly from farmers, thereby cutting down on the middlemen who eat into the earnings of the producers and often control market prices.
Foreign investors are keen too, but they also want some general merchandise, such as soaps and shampoos, to be sold through the outlets as they say food alone may not make it a viable business for them. The government has yet to accept the demand.
The government may soon make a decision on allowing foreign-funded retailers to sell non-food items, the minister said. “Amazon has decided to get into e-retail of food. They are going to put up brick and mortar apart from e-retail.”
Amazon, Grofers, BigBasket and Metro Cash & Carry have applied to the Department of Industrial Policy & Promotion for clearances to their proposals, she said.
“These retailers will have to get best prices to make more profit… Hence, the companies will have to link up with farmers and give them infrastructure, quality seed, know-how, hand-holding, which is the need today and bring in a win-win situation,” she said.
Avinash Ramachandra, director of public policy at Amazon in India, said his company has submitted a proposal to the government.
“We are excited about the opening of FDI in food retailing and the initiative the government is taking to make the food supply chain more efficient,” he added.
BigBasket national head for merchandising Seshu Tirumala said expansion of modern retail helps agriculture and food processing sectors to grow.
“The more investment comes in the sector, farmers will invest more in quality produce and drive exports from the country. It also will bring savings to farmers as cost of transportation, market cess and food wastage is saved,” he said