The Indian Wire » Startups » Why Did Amazon’s Investment in India Decline in 2019?

Why Did Amazon’s Investment in India Decline in 2019?

Amazon’s investment in India declined in 2019. The reason is multi-fold. Amazon in the past invested in a grocery business supply chain, where the investment process has slowed. Another reason for decline in investment in 2019 is probably the decline in investments into infrastructures, logistics and services. This is the first time; Amazon’s investment has fallen since its entry in India in 2012. Amazon India only invested INR 2,800 Cr this year, compared to INR 9,450 Cr in 2018. According to data sourced from

Will Amazon Continue to Invest in India?

According to commentary from Amit Agarwal, the head of Amazon’s India, the retail giant is committed toward the Indian market. Agarwal said that Amazon’s stand on investing $5 billion US dollars in India, with an additional investment of $500 million US in retail. The retail supply chain can continue to be very important to Amazon. The most recent investment has been in the Hindi-interface of Amazon’s Alexa and Hindi language support to its customer service. Reports also show that Amazon has also expanded its processing units in India by launching four new sort center and invested over $192.2 million in Amazon Data Services India in May 2019. 

Amazon states that the company has increase its presence with its Delivery Service Partner network with more than 1400 delivery stations. The company also talked about developing its Linehaul network, under which close to 10K delivery trucks are on the road each day.

What is Amazon Competing Against?

In addition to its competition with Wal-Mart for Indian supremacy, Amazon is competing against an Indian retail process that has been in place for decades. In fact, there are US investors who are betting against Amazon’s potential success. GGV Capital, a $6.2 billion investment fund is backing startups that serves family-run businesses known as kiranas.

Kiranas are prevalent across India. These are cramped spaces that can fit anything from durable goods to spices and foods. Their spaces and shelves are stacked with toothpaste, shampoo and other staples. With their personalized service, the stores usually offer door-step delivery. GGV, which has focused mostly in China and believes that Indian can be very big over the next 10 years.

Will the Trend in Indian Investments Slow?

The reversal in the trend in Indian investment by Amazon in 2019 comes in the wake of large investments into warehouses and infrastructure for delivery. The surge in investment in 2018 was reversed in 2019, but the average over the two years is more than the investment in the country in 2017. The trend in investment into the country on average has been risings, but a dip below 6,200 in 2020 could show that Amazon’s future investments are leveling off. If global economic growth continues to slow and Amazon’s stock price continue to experience sharp volatility, the company will have tough investment decisions in the future.

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