Walmart-owned Flipkart has unveiled plans to enter the grocery market in its native India.

The ecommerce giant, which sold a majority stake to Walmart in a $16bn (£11.8bn) deal last spring, has registered a new entity called Flipkart FarmerMart. The business will focus on selling local produce as it bids to grab a slice of India’s lucrative $500bn (£392.4bn) grocery market.

Flipkart boss Kalyan Krishnamurthy said the move formed “an important part of our efforts to boost Indian agriculture as well as food processing industry in the country.” He added that the company is ploughing $258m (£202.5m) into the new venture and is already working with hundreds of thousands of small farmers.

Krishnamurthy said: “We’re looking forward to investing more deeply in the local agri-ecosystem, supply chain and working with lakhs [hundreds of thousands] of small farmers, farmer producers organisations and the food processing industry in India, helping multiply farmers’ income and bring affordable, quality food for millions of customers across the country.”

The move comes as Amazon, Flipkart’s chief rival, ramps up its own Indian grocery proposition.

Amazon has already vowed to invest around $500m into building its private-label food ranges in the country and creating closer relationships with third-party suppliers over the next five years.

Amazon India has already launched its Fresh proposition as well as its rapid Prime Now deliveries in the market.

Grocery is the only sector in which online retailers are allowed to sell their own products directly to consumers under Indian law. In other categories, etailers operating in the country can only sell goods made by third-party manufacturers and brands.

Walmart, however, does not sell groceries directly to consumers but wholesales merchandise to smaller convenience stores, catering companies and hotels.