Amazon's investment in Karnataka on hold

The US-based firm has been facing taxation issues in the state

With e-commerce major Amazon chosing neighbouring state Telangana over Karnataka to set up its largest fulfilment centre (FC) in the country, the US-based firm, which has been facing taxation issues in Karnataka, said it has put its proposed investments in the state on hold till the matters are resolved. The e-commerce major last year had announced investment of $2 billion (about Rs 12,500 crore) in the country.

Amazon's warehouse in Karnataka has been partially shut for some time now due to issues raised by the state's tax regulator.

"We understand the situation to be a case where the laws have not kept pace with the new-age online business models that enable a faster, convenient and nationwide access to customers for sellers, especially small and medium businesses, at significantly low costs," an Amazon spokesperson said. Needless to say, currently all future investments in warehousing infrastructure for the e-commerce business in the state of Karnataka are on hold, the spokesperson added.

The company on Wednesday announced that they are opening a fulfilment centre and signed an MoU with Telangana government to train thousands of sellers across the state in e-commerce and take advantage of the digital economy. The new warehouse in Telangana will allow Amazon to reduce delivery time and cost of delivering products, especially in the southern states, the company said.

With the new FC in Telangana, Amazon will have 11 FCs operational across nine states in India covering a total of over one million square feet space with a storage capacity of over 2.5 million cubic feet.

"The new fulfillment infrastructure and customer service will allow Amazon to do the heavy lifting for the thousands of small and medium sellers from the state and help them grow profitably," Amazon Senior Vice-President Worldwide Operations and Customer Service Dave Clarks said.