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Amazon expands its operations in 'unlimited India'

July 15, 2016

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Amazon India has opened its largest fulfilment centre in Sonipat city in India's Haryana state. The warehouse, sprawling across 200,000 square feet, is said to be Amazon's 22nd warehouse in India, according to LiveMint.

The fulfilment centre will assist sellers in north India to stock their products with Amazon.

“It will enable thousands of small and medium businesses to save money by replacing their upfront capital expense with low variable cost and pay only for the storage space they use and the orders that we fulfill,” said Akhil Saxena, vice-president, India customer fulfilment, Amazon India.

Back in June, Amazon chief executive Jeff Bezos has pledged to invest $3 billion in India at the US-India Business Council meeting during Indian PM Narendra Modi's visit to US.

"We have already created some 45,000 jobs in India and continue to see huge potential in the Indian economy," Bezos had said at the US-India Business Council meeting.

"When I peer into the future of India, what I see is unlimited India," Bezos had said.

The investment comes on top of $2 billion Amazon invested in India in 2014.

Bezos’ $3 billion announcement follows revision of rules in India for foreign investment, which now state that online marketplaces can have up to 100 per cent foreign ownership.

Amazon sells much of its inventory in India through Cloudtail, a joint venture with Catamaran Ventures, the private investment arm of billionaire N.R. Narayana Murthy, who co-founded Infosys.

India's e-commerce markets are currently dominated by firms such as Flipkart, Snapdeal and Alibaba, but experts still say that the investment is competitive.

"It appears that Amazon is seeking to build an infrastructure just for the India market, which is good strategy given the regulatory challenges of being a foreign entity and the different e-commerce environment," said Jim McGregor, principal analyst at Tirias Research, according to TechNewsWorld.

The investment is part competitive, part political, he said, as it no doubt will curry favor with government officials in India.

"With deep pockets, Amazon can outposition smaller local competitors, while buying goodwill with the powers that be," McGregor observed.