Amazon discloses $600-mn India investments since January

Amazon's investments come at a time when Flipkart has built itself a war chest of $1.4 billion

Amazon, the world’s largest e-commerce company, has disclosed investments of $600 million (Rs 3,800 crore) in its Indian business units since January.

These investments are being used to build a seller base, which has reached 200,000; a payments arm, for which the company recently received a pre-paid instrument licence; and for setting up infrastructure. 

Amazon said half its investments in India have been used to set up warehouses and sorting and data centres.

According to disclosures made to the ministry of corporate affairs, the two largest investments of Rs 1,680 crore and Rs 1,381 crore since January 2017 were routed to Amazon Seller Services and Amazon Data Services, respectively. The company has also pumped cash into its wholesale, payments and IT services arms in India.

Amazon’s investments come at a time when Indian rival Flipkart has built itself a war chest of $1.4 billion, raised from Tencent, eBay and Microsoft. The funding round that closed in April brought long-term investors into Flipkart for the first time.

“Flipkart now has a solid set of investors and Softbank, too, is coming in through the Snapdeal deal. It is preparing for the fact that Amazon will keep bringing in money and it will have to keep raising money,” said Harminder Sahni, managing director of Wazir Advisors.

Amazon founder and Chief Executive Officer Jeff Bezos has committed himself to investing $5 billion in India over the next few years but the company says it will not hold itself below that ceiling. 

“We do not really hold ourselves back based on a targeted investment. We will require a lot of investment, as will Indian e-commerce. It is very early and we should be ready to invest for many years,” Agarwal told Business Standard in an interview earlier this year.
 

If Amazon overtakes Flipkart, it will weaken the Indian e-commerce firm’s ability to raise money. The US giant knows this is crucial if it wants to build a lead over Chinese rival Alibaba, which has begun investing in the country through Paytm.
 

“Amazon globally is diversified into multiple services, its cloud business, Amazon Web Services, being the most profitable. It has acquired Wholefoods, which will help in omni-channel retail, and it has a wallet as well,” said Arvind Singhal, chairman and managing director of Technopak.