190108 Amazon
Amazon. Image Credit: Reuters

Bengaluru: Amazon.com Inc is planning a foray into the burgeoning online food delivery business in India this year, two sources aware of the development said, in a move that could raise competition in an increasingly crowded market.

The Seattle-based company is working with local partner Catamaran, founded by IT industrialist Narayana Murthy, and has begun hiring staff for the new operation, the sources said, declining to be named because the plans had yet to be made public.

Amazon is aiming to launch the new service delivering from restaurants ahead of India’s month-long festive season, which starts in September, one of the sources said.

India’s rising middle class has driven the growth of the online food delivery sector, with research firm RedSeer Consulting saying

Profitability, however, remains elusive. The industry is dominated by local start-ups Swiggy, backed by Naspers and Tencent, and Zomato, which counts Sequoia as an investor.

Uber Technologies launched its India food delivery service in 2017 but has been unable to keep pace with the local market leaders.

Indian daily newspaper Business Standard on Monday reported that Amazon was in talks to buy Uber Eats. Reuters could not verify the news independently.

Catamaran did not respond immediately to a request for comment. Amazon and Uber said they don’t comment on rumours.

Uber rival Ola also launched a food delivery service and bought Foodpanda in 2017. That company is now moving away from marketplace deliveries and focusing on its own brand of kitchens.

Amazon last month closed its food delivery operations in the United States in the face of stiff competition.

In India, the company’s move into delivery from restaurants and takeaway food outlets will help Amazon to attract customers for its other services, one of the sources said.

The company launched its Prime services in India in 2016 and already offers services such as video and music streaming as well as groceries delivery in many cities across the country.

Amazon has been pitched in a battle for Indian market share against Walmart Inc’s Flipkart, with both companies announcing various plans to attract more customers in what is viewed as one of their most important growth markets.