Amazon faces DIPP flak for sharing resources between consumer and food retail arms

Amazon

Amazon food retail business in India already has taken a long to launch operations. After a year-long discussion with the Indian government, the retail giant had piloted it with a small setup in Pune.

Since then, two months have been passed but the US-based e-commerce behemoth’s plan to launch it across the country is still facing friction from the department of industrial policy and promotion (DIPP).

DIPP has asked Amazon to separate equipment, machinery, and warehouses for its food products and shouldn’t share anything with its marketplace arm. This could be a temporary setback for the company if it will have to start the new business with an independent setup.

Following the clampdown, Amazon has now sought clarification from DIPP whether it can share some of the warehouse staff, entry and exit doors at warehouses, barcode machines, trollies and other paraphernalia for its food-only venture with its flagship Amazon.in, reports ET.

The Seattle-based online retailer has also sought the department’s permission whether it can maintain the ‘segregation virtually, mentions the report.

In 2016, the Indian government allowed 100 per cent foreign ownership in the food retail business. Amazon committed $500 million investment to establish the food retail business, separated from its e-commerce marketplace, and to sell directly to consumers.

Amazon Retail India Pvt Ltd is wholly owned food venture of the US giant. In India, it currently offers food products through Amazon Pantry and standalone app Amazon Now. However, both platforms procured from third-party sellers.

Media reports also hint that the food retail business of Amazon works very closely with its grocery plays via aforementioned entities. They also share workforce and infrastructure which is raising concern for DIPP.

Importantly, online grocers – Grofers and Bigbasket also got regulatory approval for food license. So far, we haven’t heard about efforts made by both firms towards launching it.

Looking at Amazon tangle with DIPP, the e-tailer also would be under the scanner for arm-twisting regulations.

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