NEW DELHI / BENGALURU : The Department of Industrial Policy and Promotion (DIPP) has cleared Amazon’s proposal to invest $500 million for retailing food products in India, commerce ministry sources said on Monday. The proposal had been pending before the erstwhile Foreign Investment Promotion Board (FIPB), whose functions have been transferred to DIPP.
Having secured the DIPP’s nod, Amazon can now open a wholly owned subsidiary in India to carry out food retailing. The company will stock food products and sell them online.
However, when Express reached out to Amazon, the company said it was still awaiting an official communication from the commerce ministry.
“We are excited by the government’s continued efforts to encourage FDI in India for a stronger food supply chain. We have sought an approval to invest and partner with the government in achieving this vision,” Amazon stated. Three companies including Amazon, Grofers and Big Basket had sent investment proposals to the government worth $695 million for food retailing.
Currently, the government permits 100 per cent FDI in the food processing sector. Under existing norms, a foreign company can open a wholly-owned subsidiary in India to retail food products produced and or manufactured in the country by way of opening stores or online. Amazon is the first company getting permission to bring in FDI into the food retail after the government had last year allowed 100 per cent FDI through the approval route for trading in respect of food products manufactured and produced in India.
In 2016-17 (April-December), the food processing sector in the country received foreign direct investment of $663.23 million. The government decided to scrap the FIPB to cut down on the time FDI proposals used to take to get approvals. Following the move, the commerce ministry is directly approving proposals in concern with the retail sector.