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Amazon pledges $3-bn investment as Modi hard-sells the Indian dream

Amazon’s founder and CEO Jeff Bezos on Tuesday said fresh investment of $3 billion (around Rs 20,000 crore) will be pumped into the company’s India business.

business Updated: Jun 08, 2016 12:40 IST
Yashwant Raj
Yashwant Raj
Hindustan Times
Amazon,Jeff Bezos,Flipkart
Indian Prime Minister Narendra Modi (L) presents the 2016 USIBC Global Leadership Award to Amazon CEO Jeff Bezos during the 41st Annual Leadership Summit in Washington, DC, on Tuesday. (AFP)

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 India before Modi’s presentation here.

The prime minister’s expansive 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.

He had already seen the promise.“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.

Modi was the speaker at the event, which was followed by a dinner with senior members of US senate and House of Representatives from both parties and the India Caucus.

Bezos said his $3 billion investment was in addition to the $2 billion (around Rs 13,500 crore) he had outlined in 2014,and it would help start-ups and take India towards becoming a hub for innovation.

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 and a “significant” number of jobs would be created over time because of the deployment of Amazon Cloud Services.

Turning to the prime minister behind him on the stage, Bezos said, “The people of India are incredibly dynamic. When I peer into the future of India, what I see is unlimited India.”

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.

At the time of his last speech, he said, India faced serious domestic challenges, investor confidence was low, and doubts were expressed about the Indian economy.

In the two years since, the prime minister said, speaking in English, “we have managed to overcome the odds to register an impressive economic performance”.

He proceeded to list out his reasons for how it was done. “In the last two years, we have taken a comprehensive package of reforms, which go beyond mere economic reforms.”

Some critics have said Modi hasn’t gone far enough on reforms. But on Tuesday, the Prime Minister listed what he has achieved: One, 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 of the society. And, four, “a frontal attack on corruption”.

Sadnanad Dhume of American Enterprise Institute, said, “It was a good, solid speech. The bottomline: 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.”

The infusion of capital by Amazon into its India business comes at a time when its main competition and the largest e-commerce marketplace Flipkart is reportedly negotiating with investors for fresh funding. Media reports in the past few weeks have also suggested that negotiations with investors are prolonging on account of difference in the valuation of Flipkart’s business. Over the last three months, Flipkart’s enterprise value has been slashed to below $10 billion from a peak of $15 billion nearly a year ago.

At present, Amazon has 21 fulfilment centres with more than 5 million cubic feet of storage space.

First Published: Jun 08, 2016 11:15 IST