Amazon plans to invest $500m in food retail, brick & mortar stores

US e-commerce major Amazon has drawn up plans to invest $500 million in food retail in India, including brick and mortar stores, food processing minister Harsimrat Kaur Badal said on Thursday.

She said Germany’s Metro Cash & Carry has also shown interest in starting 50 stores in the country, including food retail. Apart from these, two e-commerce giants Big Basket and Grofers have submitted their FDI plans to enter the food retail segment through brick and mortar stores.

“There is huge interest in the food retail sector after the government allowed 100% FDI in trading of food products,” Badal told TOI, detailing the plans of foreign and domestic players in the sector. To benefit farmers and reduce wastage of fruits & vegetables, the government last year allowed 100% FDI in domestically manufactured food products.

Some foreign retailers want the government to allow them to sell other products apart from food. Estimates suggest that absence of access to markets results into nearly 40% of the produce going waste.

Metro Cash & Carry entered the domestic market in 2003. It now operates twenty-three wholesale distribution centres across in the country. Amazon said it was encouraged by the government’s FDI policies. “We are excited by government’s continued efforts to encourage FDI in India for a stronger food supply chain. We have sought an approval to invest and partner with the government in achieving this vision,” said an Amazon spokesperson.

 Bigbasket founder and CEO Hari Menon said the government’s move will propel further investment from the company into the farm sector. “We are sourcing about 80% of food products directly from farmers. Now, we will further invest in the farming sector. We have started setting up back-end infra and government’s announcements will act as catalyst,” said Menon.
“Offline is key to food retailing. Now, we are hoping that we get final approval from FIPB soon so that we can start stocking and selling directly to end-consumers,” said Grofers CFO Ashneer Grove.

Badal said her ministry has also set up a centre to facilitate partnerships between Indian and foreign companies in the food segment. “We expect huge investments after the World Food Fair in November. It will be several million dollars.” The government has taken several measures to boost the sector including mega food parks, a cold chain grid and a food grid.

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