Amazon is planning to invest Rs. 1,155 crore to build its presence in India, a move that comes barely three months after the American e-commerce company raised Rs 610 crore, indicating the need to have deep pockets to survive intensifying competition in a market that has been driven largely by massive discounts.
In a filing with the Registrar of Companies (RoC) last week, the company said that it is raising the money through a rights issue to its parent. This will be Amazon’s largest tranche of investment in India since it entered the country in 2013.
While Amazon had in July last year announced a $2 billion (about Rs.12,500 crore) investment in the country without giving a time frame, it has invested Rs 2,500 crore since then, including the latest fund infusion.
Ruchi Sally, director at retail consultancy firm Elargir Solutions, said: “With Flipkart having the first mover advantage, Amazon had to invest heavily to gain market share and propel itself into a competing position. While initial discounting strategy was easy, Amazon is now rapidly investing to grow its reach and logistics to avoid any teething problems later.”