India could be the second country to see Amazon brick-and-mortar stores, with the Seattle-based company having sought the government’s approval to open food-only outlets along with an online platform to sell these locally produced items. The US giant plans to undertake retail trading of food products
(produced or manufactured in India) to customers at any location through any channel, offline or online, including e-commerce, across India, according to a person who saw the application filed by Singapore-based Amazon Corporate Holding Pvt Ltd, which will hold 99% of the proposed entity with the rest owned by Amazon.com Inc., Mauritius. The subsidiary seeks to invest `3,500 crore over the next five years and sell third-party or its own private labels of locally produced and packaged food products. Amazon’s first grocery store in the US will open to the public this year. The US company debuted in physical stores in November 2015, when it opened the first Amazon bookstore in Seattle, followed by outlets in Portland and San Diego. India is a focus area for Amazon, which is the first global bigwig to take advantage of a June 2016 legislation that carved out a foodonly retailing segment, allowing 100% foreign direct investment for companies selling locally sourced and produced food items. Such ventures can sell through both brick-and-mortar stores and their online portals. Most other global retailers, including Wal-Mart Stores Inc., have cold-shouldered India’s ambitious liberalisation move aimed at creating millions of jobs and helping farmers. Walmart is said to have told Indian government officials that dealing only in wafer thin margin food articles does not make business sense and non-food items should be included. Amazon’s application has come as a relief for the government whose high-decibel campaign to attract global retailers and manufacturers was otherwise seen as flopping. Last year, top government officials invited representatives from Walmart, Nestle, Heinz and Thailand’s CP Foods to generate investments under the new category. Minister for Food Processing Harsimrat Kaur Badal, a proponent of FDI in food retailing, led a team of officials to London and met representatives of British companies including Tesco, Sainsbury’s, Harrods, Marks & Spencer and Cobra Beer to drum up support for the policy without any luck. It was only late last year that some positive responses started, with applications from hyper-local grocery delivery companies Big Basket and Grofers. Amazon has told the Department of Industrial Policy and Promotion that it plans to develop infrastructure, including warehouses and distribution facilities such as a temperature controlled supply chain to undertake farm-to-fork retailing of food items, according to the person familiar with its application. Amazon said the proposed venture could help yield better returns for farmers by reducing waste and cutting legions of intermediaries generally involved in the food supply chain.
(Source: The Economic Times, Mumbai, February 16, 2017)