Amazon India to invest $515 mn in food retail business over next 5 years

Last year, govt allowed 100% FDI in multi-brand food retail

Global e-commerce major Amazon is aiming to enter the food retailing sector in India with investment plans of $515 million over the next 5 years.

Food Processing Industries Minister Harsimrat Kaur Badal on Thursday confirmed the company’s investment plans while adding that Metro Cash & Carry has also shown interest in food retailing.

Back in January, Amazon had filed its application with the Department of Industrial Policy and Promotion (DIPP). Online players Grofers and Big Basket also have also submitted FDI proposals regarding retail trading of food items.

While Amazon is one of the major e-commerce players in India, Grofers and Big Basket are into online grocery space.

Last year, in June, the government allowed 100 per cent FDI in multi-brand food retail, including through e-commerce. However, the food products have to be produced, processed or manufactured in the country.

However, while the move has drawn little interest from international retail players so far who have complained that just having “food only” stores was not a viable option.

Multinationals including Walmart and French retailing major Auchan Group have indicated their interest in investing in the country if the government allows “food plus” in foreign direct investment (FDI) in retail, official sources said.

While the Food Processing Industries Ministry wants FDI rules to be eased in multi-brand retail and allow food retailers to sell non-food items to the tune of 25 per cent of all shelf products, other ministries including DIPP are examining the matter, a senior government official said.

On this note, Badal said the government will have to sort out the debate by November, this year when her ministry plans to organise the World Food Festival.

Of the Rs 30 lakh crore retail pie in India, food constitutes Rs 4 lakh crore. The food processing sector received $5.76 billion in FDI equity inflows from 2010-11 to 2015-16, according to government figures.

In the current financial year, till December incoming FDI reached 663.23 million.

Badal added that the government plans to establish a National Food Grid to boost processing level of farm produce and reduce wastages by compressing gaps in supply chain. For this, a number of mega food parks, as well as cold chain projects are being approved.

Japanese firms plan Indian units

A number of Japanese companies have shown interest in setting up units for food processing, an official said. “Japan is keen to source its requirements from India. It already sources 40 per cent of products from abroad,” the official said.

Companies like Ajinomoto, Marubeni Corporation and Calbee are seeking investment opportunities in states. Kagome, the world’s largest producer of tomato-based foods like ketchups, is among these.