Six months after getting $500 million government approval for food retailing in India, e-commerce giant Amazon is all set to sell locally made food items through a wholly-owned subsidiary from March in India, according to a report in Economic Times.
At the same time when Amazon India got food retailing approval it was also reported that the company would buy homegrown e-grocer Bigbasket but eventually Bigbasket raised whopping $280 million instead, from Alibaba and Paytm Mall, and the deal turned up dead.
Now, half a years later, Amazon India is gearing up to sell locally produced and packaged foods through its own wholly-owned subsidiary and will directly competes with Bigbasket and Grofers.
India created a food-retailing sector to allow foreign companies to set up 100% owned subsidiaries to sell food that is sourced and produced locally. ET reports that Food is the only segment where it’s allowed to sell directly to consumers.
Amazon currently runs an online marketplace in India, which means that it cannot sell directly to consumers. It is only a platform for sellers to sell their items.
The government is also considering allowing food retailer to sell personal care items, limited to 25% of their total sales.
ET reports that the government wants Amazon to keep its food-only retailing away from its marketplace business and maintain separate boards, staff, bank accounts and inventories. In fact, it is this clause of government that prevented Amazon to launch the food retailing venture in India, which was originally slated to be launched during Diwali.
To recall, last year Amazon surprised everyone when it bought Whole Foods Market Inc., a 465-store chain selling natural and organic groceries, for a jaw-dropping $13.7 billion.
Earlier in November last year, it was also reported that Reliance Jio, a wholly owned subsidiary of Reliance Industries is all set make entry into India’s online grocery market by linking manufacturers, kirana stores and corner shops to his Reliance Jio customers and mint money, however the conclusion of this report is still awaited.
Google, on other hand, has already launched food delivery app in India, in April 2017. And for same, instead of getting in direct competition, Google has tied up with Bigbasket, Grofers as partners.