Amazon Plans To Sell Locally Made Food From March

Amazon is preparing to start selling locally made foodstuff through a wholly owned subsidiary in India from March, eight months after the US behemoth received government approval to invest $500 million in the venture, according to two people familiar with the matter.

The unit can sell only locally produced and packaged food products and will directly compete with Grofers and BigBasket in the online segment. Seattle-based Amazon was the first major company to make a large investment in the food-only retailing sector that India created, allowing 100% foreign ownership in subsidiaries that would sell locally produced food items.

Other global retailers including Walmart have shied away from the segment, arguing that selling only low-margin food items does not make economic sense and such ventures should be allowed to stock non-food items such as shampoos to detergent soaps to make them viable.

Amazon won approval in July to invest $500 million in India over five years to sell third-party and its own private-label food articles, sourced and packaged locally, both online and through brick and-mortar stores. Food is the only segment where it’s allowed to sell directly to consumers. The Indian government sidestepped the intense opposition to foreign investment in multi brand retail in 2016 to create a food retailing segment that it said was aimed at creating jobs and helping farmers.

Amazon currently operates an online marketplace in India and isn’t allowed to sell directly to consumers. It can only act as an intermediary by lending its technological platform to local vendors to sell goods.