Amazon proposes to invest $500 mn in food e-retail

New Delhi: The US-based retail giant Amazon has proposed to invest about USD 500 million for e-retail of food products in India, Food Processing Minister Harsimrat Kaur Badal said on Thursday.

Besides Amazon, she said Grofers and Big Basket have also submitted FDI proposals for undertaking retail trading of food products, while Metro Cash & Carry has also shown interest in food retailing.

"We allowed 100 per cent FDI in trading of food products last year. We have got some good news. Amazon has now decided to get into e-retail of food. Amazon has decided to invest close to USD 500 million in the food retail sector. It is a good news for the country," Badal told reporters here.

The minister said the government's new FDI policy is very "attractive" and is generating huge interest among investors.

Asked about the total investment expected from Amazon, Grofers and Big Basket, she said it will be upward of USD 500 million.

The government last year allowed 100 per cent foreign direct investment (FDI) for marketing, including through e-commerce, of food products manufactured and produced in India.

E-retail market is growing at a fast pace and is set to treble by 2020, the minister said.

Asked about allowing non-food products in the FDI policy, she said the government will take a decision on this issue soon. Some foreign retailers have demanded that India should allow sale of home and personal care products.

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

"We are excited about the opening of FDI in food retailing. We have submitted an application for approvals," Amazon's Director Public Policy Avinash Ramachandra said.

Calling food processing as sunrise sector which is growing at over 7 per cent, Badal said the government is setting up mega food parks, cold chain projects and plans to establish a National Food Grid to boost processing level of farm produce and reduce wastages by compressing gaps in supply chain.

The food processing sector received USD 5.76 billion in FDI equity inflows from 2010-11 to 2015-16. In 2016-17 (April-December), the food processing sector in the country has received USD 663.23 million worth of FDI equity inflows.