WASHINGTON: Amazon CEO Jeff Bezos did not wait for Prime Minister Narendra Modi to re-pitch India. He announced a $3-billion (around Rs 20,000-crore) investment in the country before Modi’s presentation. The Prime Minister’s pitch — offering India as a new engine of global growth, backed by accomplishments of his two years in office — came later, as Bezos listened intently.
Bezos’ announcement comes at a time when domestic e-commerce companies, including Flipkart and Snapdeal, are struggling to bring in fresh funds. In June 2014, Amazon had announced an investment of $2 billion in the country.
“I can assure you it’s only the beginning and as we say in Amazon, it’s only day one,” Bezos said at an event hosted by US India Business Council (USIBC) on Tuesday. The investment would aid startup sand help India become an innovation hub, he added.
Amazon plans to open a web services cloud region in India this year in Hyderabad, thereby making India the company’s largest software engineering and development centre outside the US. The fresh investment will be used to build this development centre.
Bezos said the Hyderabad centre would create jobs and career development opportunities for thousands of people. “We have already created some 45,000 jobs in India and continue to see huge potential in the Indian economy.”
Turning to the Prime Minister behind him on stage, Bezos said: “The people of India are incredibly dynamic. When I peer into the future of India, what I see is unlimited India.”
USIBC chair man John Chambers said he believed the body’s member companies could invest around $45 billion over the next few years, in addition to the $41 billion announced in 2014.
Modi’s pitch to a hall full of big American investors or their representatives was not very different from the one he had delivered in exactly the same DC auditorium in 2014. Only this time, he had two years of accomplishment to back him up.
“We have managed to overcome the odds to register an impressive economic performance,” the Prime Minister said. “In the last two years, we have taken a comprehensive package of reforms, which go beyond mere economic reforms — first, employed right macro-economic policies to create a strong foundation. Two, implemented policies to stimulate growth and employment through investment and trade. Three, adopted policies to make sure benefits reached the poor and weaker sections. And, four, ‘a frontal attack on corruption’.”
“It was a good, solid speech,” said Sadnanad Dhume of American Enterprise Institute. “Modi is not interested in dangling the carrot of market-based reforms to attract business. He wants multinationals to invest in India, but on his terms.”
Faced with devaluation by several investors, Flipkart is struggling to raise funds at its preferred valuation. Reports in the past few weeks have suggested that negotiations with investors are prolonging on account of difference in the valuation of the e-tailer’s business. Over the last three months, Flipkart’s enterprise value has been slashed to below $10 billion from a peak of $15 billion a year ago. Snapdeal, too, has faced rejection by several investors, according to reports.
Amazon has 21 fulfilment centres (warehouses) in India, with more than 5 million cubic feet of storage space. With the latest funding, its total investment in India will be higher than the total funds raised by Flipkart ($3.2 billion) and Snapdeal ($1.6 billion).