Amazon's food business at stake due to FDI guidelines

Formed for the e-commerce sector, the Government's revised FDI guidelines offer support to traditional businesses posing a threat to food retail giants.

The US-based online retail company Amazon has decided to discontinue selling food on its website which will be effective from February 1, 2019.

Amazon was the only foreign retailer pledging investment in the food retail business that amounted up to USD 500 million. The new guidelines pose as an obstacle to this as well as affects Amazon's decision to buy a stake in Future Retail.

The company had planned to acquire a 9.5 per cent stake in Future Retail owned by Kishore Biyani but according to the new guidelines, that won't be possible as the group is a seller on the Amazon website.

Speaking about the development, one of the people having direct knowledge said, “Amazon Retail India Pvt Ltd (ARIPL), which is a seller of foodstuff on Amazon.in, will stop selling post-February 1 in a bid to comply with the new marketplace regulations.”

“We remain committed to invest in India in a way that can work with the government’s vision towards the farmer and agricultural community but at present, we are still evaluating the Press Note 2 guidelines,” added the seller.

Speaking on this matter, Commerce Minister Suresh Prabhu said, “We support FDI entering India. We recorded a total of $61.85 billion of FDI and we are now targeting $100 billion, and to achieve this we have prepared a plan which will help the company to invest. We will also have to assure all the foreign investors and domestic investors that we will continue to have a stable and transparent policy.”

Several industry experts believe that these new rules will protect the interests of traditional businesses as several of these companies had complained of huge losses due to these e-commerce giants.

Source: Economic Times