A govt rule is delaying Amazon's plans to launch online food business

Amazon can sell food and groceries on both offline and online platforms in India

Amazon is the first global company to get government's approval to sell food made and packaged in India directly to consumers. However, the firm's plan to launch the business segment during Diwali failed to take off 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. 

In India, foreign retailers are not allowed to sell any non-food items directly to consumers. Hence, food is the only segment where Amazon is allowed to sell directly to consumers. The company can sell food and groceries on both offline and online platforms, according to an Economics Times report.

“We have not announced any dates or details about our approval for food retail licence and we cannot comment on future plans,” an Amazon India spokesperson told ET.  

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 Amazon Now app it also offers same-day grocery delivery through a tie-up with retailers like Big Bazaar and Hypercity.

Amazon reportedly 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, a source told ET. 

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.