Amazon invests Rs 1,696 cr in India

The investment is considered to be part of the $2 bn Amazon Group CEO Jeff Bezos had announced during his visit to India in July 2014

Global online retail giant Amazon has ploughed Rs 1,696 crore into its India unit as part of its planned $2-billion investment over the next few years in the country to take on homegrown rivals Flipkart and Snapdeal.

The investment comes at a time when the company is engaged in a battle with the Karnataka government over taxation issues. The ongoing case has restricted Amazon from growing its presence in the state, one of the key markets for online retail in India.

According to documents filed with the Registrar of Companies, Amazon's India unit received the latest investment in December, bringing the total capital infused into the company to Rs 5,699 crore since July 2014.

In reply to a query by Business Standard, an Amazon spokesperson said the company is "committed to invest aggressively with a long term horizon and transform the way India buys and sells".

"We are very pleased with the growth momentum we are witnessing in India. At the end of Q3-2015, we saw an approx. 500 per cent YoY growth in volume, and in Q4-2015 we sold more than we did in all of 2014. As per comScore, Amazon.in is the Most Visited Ecommerce site in the country and we also had the fastest growing shopping app among all e-commerce companies in 2015," the company added.

The investment is considered to be part of the $2 billion (approx Rs 13,500 crore) Amazon Group chief executive officer Jeff Bezos had announced during his visit to India in July 2014. In response, rivals Flipkart and Snapdeal, too, have been raising massive rounds of venture capital to stay ahead of Amazon.

Flipkart has raised $2.1 billion in the period since Amazon said it would invest $2 billion in its India unit. Another massive $1 billion funding round in Flipkart is rumoured to be in the works. Snapdeal, which is backed by Japan's SoftBank, has raised $1.3 billion in the same period.

The fight between tax authorities in Karnataka and Amazon India has dragged on for nearly 18 months now. Due to the ongoing status of the case, Amazon hasn't been able to add more sellers to its platform, hurting business and making it harder for the company since it has to facilitate products to be shipped from outside the state. A Karnataka finance department official said the government had told Amazon that it either needs to own up to pay value added tax for transactions on its platform by its vendors or ensure the vendors pay taxes. Amazon has disputed this.

Bengaluru, the capital of Karnataka and also where Amazon India is headquartered, is one of the largest e-retail markets in India. Moreover, given higher penetration of smartphones in South India, Karnataka represents a huge market for online sellers.

Amazon has 21 warehouses in India so far, three of which were set up during 2015. Among the three large e-commerce companies in the country, Amazon is estimated to have the largest logistics capabilities. To protect its leadership in the space, Flipkart, too, has earmarked $2.5 billion for growing its logistics and supply chain, and would also allow third party online and offline sellers to ship products through it.

While Flipkart says it has over three times as many customers as Amazon and Snapdeal on its mobile app, Amazon claims it is is the leader in terms of the number of people who visit its mobile and desktop websites. In November it claimed it received 200 million visitors, compared 163 million on Flipkart and 109 million on Snapdeal.