Harsimrat Kaur Badal seeks to clear cloud over Amazon’s food plans
Food processing minister Harsimrat Kaur Badal has asked the Department of Industrial Policy and Promotion (DIPP) to relax restrictions imposed on Amazon’s food retailing plans, which have prevented the Seattlebased company’s ambitious $500-million project from taking off.
Progress on Amazon’s investment proposal has been stalled by operational curbs for almost a year since it won approval.
The DIPP, a division of the commerce and industry ministry that facilitates investment and technology flows, wants Amazon to separate the warehouses, logistics and inventories for the food-only venture from those of its flagship online marketplace in India.
“Last month, I met the officials at DIPP to sort out Amazon’s food retail venture, which had met with some roadblocks,” Badal told.
“First, DIPP was not allowing them to have it (food retail and marketplace products) in the same space. Then they told them to maintain separate inventories.” The minister said that while DIPP has agreed to relax the requirement of maintaining separate warehouses, the department is yet to allow Amazon to use the same transportation and logistics resources for distribution in both ventures.
Badal to Meet DIPP Officials Again
Amazon declined to comment on Badal’s initiatives.
Badal, the advocate and architect of India’s food-only retailing policy, is pushing the largest investment in the sector, which other global giants have spurned. The minister said she will meet DIPP officials again in a bid to clear other “roadblocks” for Amazon.
Amazon has invested billions of dollars in infrastructure such as warehouses, logistics and and transportation for its online marketplace in India and not being able to use these resources for the food retailing venture would only make the business known for its wafer-thin margins more difficult, said a person familiar with the matter.
Amazon had committed investing $5 billion in India in 2016 and a recent report said it would put in an additional $2 billion after Walmart acquired control of local online rival Flipkart.
Analysts said Badal is trying to salvage a showcase investment proposal of the 2016 policy allowing 100% foreign ownership in retail ventures that sell food products directly to consumers — both online and offline — provided they are sourced and packaged within the country. Amazon was the only global giant to apply through this route. Others including Walmart said food-only ventures by themselves didn’t make sense and the government must allow them to stock a portion of non-food items to make to make the business viable.
However, Amazon’s plans hit a snag after the government asked it to keep the food retailing venture separate from the online marketplace business. Amazon has asked the DIPP whether it can share some of the warehouse staff, entry and exit doors at warehouses, barcode machines, trollies, pallets and other logistical paraphernalia for its food-only venture with the existing infrastructure of Amazon.in.
The Seattle-based retailer also wants to know if it can maintain the “segregation virtually”.
Badal said the DIPP has asked Amazon not to use the marketplace transportation and distribution network for its food retail business and said she would talk to DIPP to get the issue “sorted”.
Amazon Retail India Pvt, the wholly owned food venture of the US company, has been running a pilot in Pune. However, sources said the operation is merely an extension of Amazon India’s online grocery retail initiatives, with the only difference being bills issued in the name of Amazon Retail India.
When India opened food-only retailing to FDI in 2016, Badal travelled to the UK, Italy and France to woo retailers and food processing companies including Tesco, but the response was muted.
Source: Economic Times