Amazon to Invest USD500 Million for Food eRetail Sector

Amazon has proposed to invest about USD 500 million for e-retail of food products in India.

India: Amazon has planned to invest in online retail sales food products in India and will be investing USD500 million for the proposal. Besides Amazon, Grofers and Big Basket have also submitted FDI proposals for undertaking retail trading of food products, while Metro Cash & Carry has also shown interest in food retailing.

Amazon has now decided to get into e-retail of food and the combined investment from these three companies is set to exceed USD500 million in the food retail sector. The government is setting up mega food parks, cold chain projects and is planning to establish a National Food Grid to boost processing level of farm production and reduce wastages by compressing gaps in supply chain. The new FDI policies are helping food sector by generating huge interest among investors.

TechSci Research depicts that last year the government allowed 100 per cent Foreign Direct Investment (FDI) for marketing, including through e-commerce, of food products manufactured and produced in India. The food processing sector received USD5.76 billion in FDI equity inflows from 2010 to 2015. In 2016, the food processing sector in the country has received USD 663.23 million worth of FDI equity inflows. On account of these factors, the market of food services is expected to increase during coming years in the country.  

According to a recent report published by TechSci Research “India Food Services Market Forecast & Opportunities, 2020”, the market for food services in India is expected to grow at a CAGR of over 12% through 2020. Growth in the market is anticipated primarily on account of higher disposable income, improved standard of living and changing preferences of consumers. In addition, expansion of brands into tier II and tier III cities, is also a major factor which is expected to drive growth in food services market of the country over the next five years. In 2013, the market was dominated by unorganized and non-branded players, however, with growth of various foreign and domestic brands, these players are expected to lose their market to organized branded players. Segment-wise, dining food services segment was the largest contributor in India food services market in 2014, on account of the large number of dining restaurants in the country. The segment is expected to retain its dominance in the market over the forecast period as well.