Amazon to Enter Food Retail with USD 500 M FDI in India
Industry Trends
11-07-2017 00:00:00
Amazon to Enter Food Retail with USD 500 M FDI in India

The Indian Government has officially approved US e-commerce giant Amazon’s proposal to invest $500 million in the retail of food products in India.


The Department of Industrial Policy & Promotion (DIPP) — the nodal body for the retail sector — decided to greenlight Amazon’s proposal at a meeting last week, a government official told BusinessLine.


“A formal letter from Commerce and Industry Minister Nirmala Sitharaman, permitting Amazon to start food retailing, was issued on Monday,” the official added.


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.


Faster approval


Earlier, the FIPB would consider FDI proposals that had to be routed through the government. Now, line ministries have the power to approve FDI proposals that are not under the automatic route.


In case the FDI value is over ₹5,000 crore (about $775 million), it has to be routed through the Union Cabinet. “The fact that the DIPP had already given an internal clearance to Amazon’s proposal when the FIPB was in existence helped it take a fast decision on the matter,” the official said.


Amazon is the first company to be allowed FDI in food retail after the sector was fully opened last year. Foreign firms can now set up a wholly-owned arm to retail food products produced or manufactured in the country by opening brick-and-mortar stores, or through an online marketplace.


“In its application, Amazon stated that it intended to retail food products to customers at any location through any channel, offline or online, including e-commerce, across India,” the official said. Online grocery stores Grofers and BigBasket have also applied for permission to bring in FDI into their respective ventures.

-K Ramanathan

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