Amazon India gets FDI battleready

Centre is likely to open up e-commerce sector to foreign investment as early as next month.

Bangalore | Published: June 12, 2014 2:23:20 pm

Continuing with its rapid expansion plans, Amazon India has commissioned two warehouses in Karnataka bigger than those in Mumbai and Bangalore.

The two new warehouses, or fulfilment centres as Amazon calls them, are at Tumkur, 70 km from Bangalore, and Hoskote, 30 km from the city. The warehouses are said to be around 200,000 sq ft, bigger than the company’s two existing 150,000 sq ft fulfillment centres.

The warehouses are expected to give a fillip to the Seattle-based Amazon’s operations in India if the Centre allows foreign e-commerce companies to hold their own inventory and sell directly to consumers. At present, foreign companies can engage in business-to-business e-commerce, where 100% FDI is permitted.

Consequently, Amazon is restricted to being a marketplace in the country, providing third-party sellers with a platform to trade their wares.

The Centre is likely to open up the sector to foreign investment as early as next month, which, industry observers believe, might give players like Amazon — with deep pockets and proven infrastructure — an edge over its Indian competitors. The Indian e-commerce industry is valued at $3.1 billion and is expected to cross the $20-billion mark in the next five years.

Amazon declined to comment on the warehouses. A company spokesperson, however, said the company believed that opening up e-commerce to FDI would be good for consumers and businesses.

“We believe that opening up this sector to FDI will be good for consumers and Indian businesses as it would allow us to partner with local manufacturers to source products not carried by other sellers on the marketplace, giving Indian consumers unique and wider choices at lower prices. Allowing FDI will positively impact infrastructure development in the country,” the spokesperson said.

Since its arrival in India last June, Amazon has expanded its portfolio at a rate which has alarmed its rivals in the country. In the last one year, the company has increased its offerings to 15 million products across 28 categories and claims to have the largest selection in 11 segments, including books, movies & TV shows, home and kitchen ware, music and video games. The number of sellers on its platform has also grown 50 times since its launch to 5,000. Amazon has also forayed into the high-margin fashion with the launch of apparel stores for men and women.

According to Ankur Bisen, senior VP, retail, at advisory firm Technopak, “In the US, Amazon’s share is around one-fourth of the $220-billion e-commerce industry. It’s not that Amazon will come and take away everything that domestic players have accrued over the years. We will see some fair competition between the Indian and foreign players,” he said.

Sayan Chakraborty | Financial Express

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