Online retailer Amazon has won approval from the Indian Government to build a full-fledged food retail business through its fully owned subsidiary.
This approval enables the company to compete with Indian online rival Flipkart.
An Amazon India spokeswoman told Press Trust of India: “We are excited by the government’s continued efforts to encourage foreign direct investment in India for a stronger food supply chain.”
Citing a source familiar with the matter, Reuters reported that Amazon intends to invest $500m in the food business.
It is reported that the firm has already committed to invest more than $5bn in the country.
Online shopping has grown in the country due to the availability of cheaper smartphones, the increasing popularity of internet shopping and heavily discounted prices when compared with offline retailers.
Amazon provides food items through Amazon Pantry in India, where retailers that include joint venture Cloudtail sell various products.
It has collaborated with large Indian retailers such as Big Bazaar to provide same-day grocery delivery to customers using its Amazon Now app.
It is not yet known if Amazon’s existing partnerships would be affected by the new investments.
Flipkart also intends to launch into the grocery segment.