Amidst facing disruption from revised e-commerce FDI policy, which is in effect from the last week, the US e-tailer has got respite from the government.
The govt has given nod to Jeff Bezos-led firm’s food retail business to continue selling on its Indian marketplace. The FDI in food retailing would not be replaced by the revised FDI press note 2 issued in December.
After getting clearance from the govt, Amazon has started to bring back products for Amazon’s pantry. At present, it has been offering select food products, such as cookies and tea, reports Reuters.
In the last few years, the e-tailer has scaled its retail business as the prime seller of its food and grocery products.
FDI in food retail will be out of the purview of curbs in the e-commerce FDI policy that came into effect on February 1, according to the clarification issued earlier by the Department for Promotion of Industry and Internal Trade (DPIIT).
In recently implemented FDI policy for e-comm, the govt prohibited marketplaces from selling products through companies in which they own stakes. The policy asked Amazon and Walmart-owned Flipkart, to restructure their business model.
Amazon India had to delist about 500,000 products from its sellers Cloudtail, Appario and Shoppers Stop. It also started adding new sellers on its platform.
As per the latest development, equity holdings in its sellers Appario is rejigged to make it eligible to return. NR Narayana Murthy’s Catamaran Ventures has increased its stake in Cloudtail to 76% from 51% reducing US e-tailer stake to 24 percent. Earlier, Amazon held 49 percent stake in the firm.
The revised policy had also cast a shadow on Amazon food retail business and its expansion plan in India.
In November last year, Amazon had reportedly signed a term sheet to buy 9.5 per cent stake in Future Retail Ltd for about Rs 2,500 crore.
Meanwhile, in 2016, the government had allowed 100 per cent FDI in food processing and trading, including through e-commerce, for products manufactured in India.
In the following year, US e-tailer has got govt’s nod to invest $500 million in the food retail.