Amazon applied to the government to $500 million investment in the wholly-owned venture in India. Last year, the company launched the Amazon Now service for the hyperlocal delivery in a few selected cities in the country. Amazon India plans to start the Online Food Venture.
The company is competing against the BigBasket and Grofers who have strong hold right now in India. However, Amazon can’t sell the products of its own online which is one different from other online websites. It has to source those from the grocery store and supply it to customers.
Amazon India subsidiary filed an application with the Department of Industrial Policy and Promotion (DIPP) to the obtain licence to set up a retail chain in the country. After the approval from the department, it can sell food products locally produced directly from the farmers.
“We are excited by the government’s continued efforts to encourage FDI in India for a stronger food supply chain. We have asked approval to invest and partner with the government in achieving this vision,” said the Amazon Spokesperson.
Another giant retailer, Walmart was not interested in selling only thin-margin food products and despite the Government’s relaxation of FDI rules. The government decision to allow 100% FDI based on the assumption that farmers will able to benefit directly rather than selling to other companies that sell processed food in India.
Right now, the products that taken from the farmer processed in factories and then sold through Amazon. However, the government wants the company to directly purchase from the farmers, stock on its own warehouse and can sell directly to the farmers.
Hence, through this way, farmers will also get enough profit and consumer also gets more options to choose from. Amazon India is planning to set up the huge business in India.