Barely a month after new guidelines for FDI in ecommerce kicked in, Amazon has infused around USD 35 million into Amazon Retail India Private Limited (ARIPL) against an allotment of 240 million equity shares of face value Rs 10 each. Amazon Corporate Holdings, Singapore, raised the fund with a little helping from Amazon.com, the US-based parent company.
Amazon Retail India deals in packaged foods, personal care items, and perishable commodities like fruits and vegetables.
Last week, Amazon Retail’s filings with the corporate ministry showed that the firm had increased its authorised share capital to Rs 355.5 crore from Rs 165.5 crore earlier, Business Standard reported.
ARIPL was incorporated in 2017 after the Indian government allowed 100% FDI in food retail. ARIPL had received a license to retail food products through an inventory-led model.
However, specific conditions regarding the policy such as the need for a separate warehouse for food stock threw a spanner in its works.
Amazon later converted ARIPL into a seller of grocery items on Amazon.in. It also sells under Amazon Pantry and Prime Now, an independent two-hour delivery service launched by Amazon in May 2018.
Amazon is doubling down on the high-repeat grocery business to take on the likes of Grofers and BigBasket in India. The fresh infusion will be used to expand inventory and scale up operations.
“Our food retail business currently serves customers in 100 plus cities across India. We are on track to scale the business further by adding more selection and expanding reach to serve customers in more pin codes,” the company told Economic Times.
Food and grocery accounted for USD 540 billion of the total USD 880 billion in retail sector in India in 2018, according to market researcher Forrester.
ET had reported on January 15 that Amazon Retail India would stop selling on the local marketplace on February 1 pending clarity on the new government regulations on ecommerce.
Amazon had proposed to invest around USD 500 million in retail of food products back in 2017.