Amazon pumps in Rs 2,800 crore into India unit after its exit from China

Bengaluru: Online retail giant Amazon has stepped up its investment in India and pumped in Rs 2,800 crore into its marketplace. The fresh investment comes at a time when the Seattle-headquartered firm has signed off from China. In December last year, Amazon invested Rs 2,200 crore into its Indian entity.

The investment was made into Amazon Seller Services (Amazon.in), which runs a marketplace that assists sellers to sell their products online. The funding is expected to help Amazon take on its rival Walmart-owned Flipkart with whom the company is in a fierce battle for dominance in India’s online retail market.

Amazon India allotted 2.8 billion equity shares of Rs 10 each aggregating to Rs 2,800 crore at par on rights basis to the existing shareholders of the company, according to the regulatory documents filed by Amazon, which were sourced from business intelligence platform Paper.vc. The resolution for this capital infusion was passed by the board of directors of Amazon Seller Services on May 21.

The investment also comes at a time when Amazon had to face downtime in India owing to recent changes in the country’s e-commerce regulations. However, Brian T Olsavsky, senior vice-president and chief financial officer of Amazon, had said that the company had to make structural changes to comply with all the new regulations in India.

The revised e-commerce policy, announced last December, had barred e-commerce players from selling products through entities in which they own a stake. Vendors were also not allowed to have more than 25 per cent of their revenues coming from a single platform.

The new rules, which came into effect from February 1, 2019, also stopped online retailers from selling goods exclusively on e-commerce platforms. Jeff Bezos-led Amazon has so far made over $5 billion investment in India. Some reports suggest that the company may have invested an additional $2 billion on top of that.

Like in the US, Amazon is pitted against Walmart, which acquired a majority in Flipkart last year in a $16-billion deal, to dominate the e-commerce market in India. This market is expected touch $200 billion by 2028, from about $30 billion last year.

This year during April-May, Walmart President and Chief Executive Officer (CEO) Doug McMillon and Judith McKenna, president and CEO of Walmart International, visited India to assess the progress made by Flipkart. They also met the senior leadership of Flipkart and group companies — Myntra and PhonePe — and is learnt to have discussed strategy to take on Amazon.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.