The Centre has decided to approve US retail giant Amazon’s proposal to invest $500 million in food retail sector in India.
The Department of Industrial Policy & Promotion (DIPP) — the nodal body for the retail sector — at a recent meeting decided to give its nod for Amazon’s proposal, a government official told BusinessLine.
“A formal letter from the Commerce & Industry Minister, Nirmala Sitharaman, issuing the permission to Amazon to start food retailing is expected soon,” the official added.
Amazon had applied for permission to bring in FDI into the food retail sector a few months ago, but the proposal got held up because of the decision to dismantle the Foreign Investment Promotion Board that cleared FDI proposals that had to be routed through the government.
“The fact that the DIPP had already given an internal clearance to Amazon’s proposal on food retail when the FIPB was in existence, helped it to take a fast decision on the matter under the new regime,” the official said.
After the dismantling of FIPB, line ministries now have the power to approve FDI proposals that are not under the automatic route. In case, the FDI value is over Rs. 5,000 crore, it has to be routed through the Union Cabinet.
Amazon is the first company getting permission to bring in FDI into the food retail after the sector was opened up 100 per cent to FDI last year. Foreign companies are allowed to open a wholly-owned subsidiary in India to retail food products produced or manufactured in the country by opening brick-and-mortar stores or online.
“In its application, Amazon stated that it intended to retail food products to customers at any location through any channel, offline or online, including e-commerce, across India,” the official said.