India's food processing minister Harsimrat Kaur Badal said that US e-commerce major Amazon has drawn up plans to invest $500 million in food retail in India. She said Germany's Metro Cash & Carry has also shown interest in starting 50 stores in the country, including food retail. Apart from these, two e-commerce giants, Big Basket and Grofers, have submitted their FDI plans to enter the food retail segment through brick and mortar stores.
After the government allowed 100 per cent FDI in food products, foreign firms were showing huge interest to enter India, she said. The government last year allowed 100 per cent FDI in the food processing sector to save domestic farmers and to reduce wastage in fruits and vegetables. Some foreign retailers want the government to allow them to sell other products apart from food. Estimates suggest that absence of access to markets results into nearly 40% of the produce going waste.
Metro Cash & Carry entered the domestic market in 2003. It now operates 23 wholesale distribution centres across the country. Amazon said it was encouraged by the government's FDI policies. “We are excited by 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,” said an Amazon spokesperson.
Bigbasket founder and CEO Hari Menon said the government's move will propel further investment from the company into the farm sector. “We are sourcing about 80% of food products directly from farmers. Now, we will further invest in the farming sector. We have started setting up back-end infra and government's announcements will act as catalyst,” said Menon.
“Offline is key to food retailing. Now, we are hoping that we get final approval from FIPB soon so that we can start stocking and selling directly to end-consumers,” said Grofers CFO Ashneer Grove.
