Amazon pumps Rs 2,900 crore into its India unit in a challenge to rival Flipkart

In a bid to fend off India's homegrown e-commerce giant Flipkart, Jeff Bezos-led Amazon has invested Rs 2,900 crore in its India unit, Amazon Seller Service. The fresh investment is part of Amazon's commitment to put in $5 billion into the Indian market. With this recent investment, Amazon has invested $2.6 billion or Rs 17,840 crore in the current financial year itself, according to regulatory filings with Registrar of Companies. The Seattle-based company competes with online marketplace Flipkart, which had recently claimed that it was sitting on more than $4 billion cash on its balance sheet.

Amazon founder Jeff Bezos had last year committed investments to the tune of $5 billion into the Indian market. With the new funding Amazon has almost doubled its authorised capital to $4.74 billion. To consolidate its position in the Indian online retail market and to fend off local rival Flipkart, Amazon had invested Rs 1,680 crore into its India unit in June and Rs 1,620 crore last month, surpassing Rs 2,010 crore investment it made last year.

"As India's largest and fastest growing e-commerce player, and with a long-term commitment to make e-commerce a habit for Indian customers, we continue to invest in the necessary technology and infrastructure to grow the entire ecosystem. We are delighted and humbled by the trust from our customers, to lead in India on things that matter to our customers in over four years of our business, while continuing to launch innovative India-first initiatives as well as completely new offerings like Echo, Prime and Prime Video," an Amazon India said in a statement.

"We had the first Prime Day sale there this year, Prime Music, Amazon Business are also expanding in India. So, a lot of positive momentum and investment going on in India, we are very pleased with that. We also recently announced Echo and Alexa will be available in India," he further added.

Amazon Seller Services is also increasing its authorised share capital from Rs 16,000 crore to Rs 31,000 crore, which means that the retail giant's investment commitment is likely to shoot past 5 billion dollars.

In August, Flipkart had raised an estimated $2.5 billion from Japanese internet giant SoftBank group in the biggest ever private investment in an Indian technology company. Flipkart had said that the investment was part of the previously announced financing round where it had raised capital from three of the world's premier technology companies - Tencent, eBay and Microsoft. "Flipkart will have in excess of $4 billion of cash on balance sheet," it added.

Amazon India, which completed four years of operations early this year, has been directing its investments towards building warehouses, strengthening logistics and increasing product assortment.

A report in Economic Times quotes Arvind Singhal, head of retail consultancy, Technopark, saying that this shows that Jeff Bezos' commitment of $5 billion to the Indian marketplace was not symbolic and that Amazon is using its investment in three areas - creating fulfillment centres, spending more on customer acquisition through Prime, and strengthening its distribution infrastructure.

The festive season sales that were offered by Flipkart and Amazon were nothing short of a stiff competition. The e-commerce industry had a total earning of Rs 9000 crore. However, at the end of it, Flipkart emerged the winner. So, Bezos' decision to pour in more money in the Indian market comes across as a significant development.

Like Amazon, Flipkart too had raised 2.4 billion dollars from SoftBank and 1.4 billion dollars from Tencent Holdings, eBay and Microsoft.