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Amazon on verge of opening physical and online food stores

By RJ Whitehead

- Last updated on GMT

© iStock
© iStock

Related tags: Food

India could be the second country to see physical Amazon stores, while there are rumours that the e-commerce giant has also sought the government’s approval for online sales of foods manufactured in India.

The American retailer plans to begin “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 Economic Times.

If this happens, a Singapore subsidiary would set up the operation, with Rs35bn (US$523m) set aside for investment over the next five years, according to the paper’s source. Amazon will open its firsts dedicated grocery stores in America later this year.

Amazon has India in its spotlights, having set an aggressive pace in planning since the government passed legislation last June to allow full foreign direct investment in food-only retailing, as long as stores sell only locally sourced and produced goods.

It was the first major retailer to take advantage of the updated FDI regulations, which allow for sales to me made both online and through brick-and-mortar sites. 

Rivals like Walmart, which was among Indian retail’s frontrunners before pulling out of an unhappy partnership with Bharti Enterprises in 2013, have been slow to lead the charge even though food ministers have worked hard to gain their backing.

Amazon’s application came as a relief for the government, which needed to show its drive to attract foreign food manufacturers had been working after food processing minister Harsimrat Kaur Badal has set out to court the likes of Nestlé, Heinz and Thailand’s CP Foods. 

Livemint ​earlier this month reported that the e-commerce giant had also sought government’s approval for online retail.

As with the physical stories, Amazon would not be able to sell products of its own online. Instead, it would have to source these from domestic wholesalers for supply to customers

We are excited by the 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​,” Amazon said in a statement. 

More stories from India…

20% of Kerala foods found to be adulterated

Official data has shown that one fifth of all packed food items sold in the southern state of Kerala are either adulterated or misbranded.

Adulteration

According to India’s food regulator’s annual report, authorities in Keral aregistered a total of 586 cases in connection with adulteration, resulting in Rs1.4bn (US$20.6m) crore in fines between 2014 and 2016. 

Of the 4,931 samples analysed from Kerala, 923 were found to be adulterated or misbranded from a number of industry segments, an official told the New Indian Express.

Be it coconut oil, milk, tea, rice, spices or items included in our daily diet, adulteration is taking place at an alarming level. Harmful chemicals were also found in many of these products. The best way to tackle the issue is to create awareness and further strengthen the monitoring mechanisms​,” the food safety officer said.

He blamed vague rules on authorised health claims for the high number of convictions, adding that the low conviction rate and lack of officers are prime reasons for such food items finding their way into the shelves.

Market update: Disappointment for Indian rice exporters

Indian basmati rice prices have risen 20% since the end of November, based on hopes that Iran will resume rice imports during the July-November harvest season, following a ban last year. 

Rice

Yet there was bad news for Indian rice exporters at the start of February, when Iran imposed a ceiling on import prices. 

The new restrictions will prevent Indian exporters from selling shipments beyond rates of US$850 per tonne, which is well below the usual landed cost of US$950 per tonne. This could hamper exports of rice from India if the ban is eventually lifted. 

According to Mintec, the commodities analyst, Indian rice exports to Iran have surged after a rupee settlement mechanism was approved in April 2012 to avoid sanctions from America and European Union for exporting to a banned country. 

As a result, Iranian rice stocks have remain high after it imported 1.4m tonnes of the cereal from India in 2013/14. Imports subsequently dropped to 0.9m tonnes in 2014/15 and 0.7m tonnes in 2015/16. 

Related topics: Business, Supply chain, South Asia

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