In India, foreign retailers are not allowed to sell any non-food items directly to consumer and thus food is the only segment where Amazon is allowed to sell directly to consumers and this actually disrupted the firm’s plan to launch the business segment during Diwali as the government has asked it to keep the food and the marketplace businesses completely separate from each other with different offices, inventories, and accounting systems.
Amazon is the first global company to get government’s approval to sell food made and packaged in India directly to consumers. However, the company can sell food and groceries on both offline and online platforms.
But Amazon has not announced any dates or details about approval for food retail licence. In a way, Amazon has already jumped into the segment though it hired thirty-party for certain operations.
Currently, the Seattle-based firm sells food products in some Indian cities through Amazon Pantry from third-party sellers. In AmazonNow app it also offers same-day grocery delivery through a tie-up with retailers like Big Bazaar and Hypercity.
The e-commerce giant plans to invest $500 million in India over five years to sell third-party and its own private-label food articles, sourced and packaged locally.
Now, the warehouses that Amazon uses are leased to Amazon Seller Services Pvt. Some of these warehouses will be transferred to Amazon Retail India Pvt as part of the segregation. The company will also have to get Food Safety and Standards Authority of India (FSSAI) licensing.
The government has granted these permissions for 100 per cent foreign direct investment for retail trading of food products manufactured and/or produced in India, Commerce and Industry Minister Nirmala Sitharaman said in a written reply to the Rajya Sabha in August. The approved proposals were from Amazon Retail, Supermarket Grocery Supplies and Grofers India. Amazon Retail proposed an investment of Rs 3,500 crore.