Salman Rushdie started as a Sci-fi author. Then he moved into "Magic realism", which is Fantasy without the barbarians and buxom wenches (or more eloquently written barbarians and buxom wenches).

"Literature" is the label for works that are good enough that everyone should read them, not just genre fans. "Romance", "Sci fi", "Travel", "Crime", "Comedy", "Detective", "Drama" and so on are works that aren't good enough for everyone to read.

Of course, there's writers who hack their way into the "Literature" section by imitating the quirks of a genuine pieces of literature, or just avoiding all the other categories.