An employee takes stock of stacked products at an Amazon warehouse in Bangalore. Photo: AFP

US e-commerce giant Amazon continues to be bullish on the Indian market, although they are yet to turn profitable after starting their retail operations in the country in 2013.

Amazon will pump more than 44 billion rupees (US$620 million) in its various units in India.

This includes the marketplace and food retail sectors to fight arch-rival Flipkart as well as the yet to be launched e-commerce business of Reliance Industries, whose promoter is India’s richest man, Mukesh Ambani.

This fresh funding comes in the backdrop of Amazon registering a cumulative loss of more than 70 billion rupees ($987 million) across various units in 2018-19, the Press Trust of India reports.

According to the regulatory filings made to the Corporate Affairs Ministry, two entities – Amazon Corporate Holdings and Ltd – are pumping in 34 billion rupees in Amazon Seller Services (marketplace unit), 9 billion rupees in its payments arm Amazon Pay (India) and 1.72 billion rupees in Amazon Retail India (food retail business).

Amazon founder Jeff Bezos had committed investment worth $5 billion in the Indian market in 2016. Amazon and rival Flipkart, owned by US retail giant Walmart, has also been pumping in millions of dollars to strengthen their position in the Indian e-commerce market.

During this fiscal year Amazon Seller Services, the online marketplace arm of the e-commerce giant in India, managed to narrow its losses to 56.85 billion rupees, while its revenues grew 55% to 77.78 billion rupees in 2018-19 over the previous fiscal. However, Amazon Pay’s losses widened more than three times to 11.60 billion rupees from 3.34 billion rupees in 2018.

The digital payments market in India has become quite competitive and Amazon Pay is pitted against Flipkart’s PhonePe, Google Pay and Paytm. The market is now dominated by Paytm, which has the financial backing of Ant Financial and SoftBank.

Walmart is planning to demerge PhonePe from Flipkart, so that it will have direct control over it. Facebook’s popular messaging service WhatsApp is also planning to launch a payment service.

Estimates suggest that e-commerce accounts for under 5% of India’s retail market, but is expected to grow substantially as more and more Indians become internet and smartphone savvy and go online to shop.

According to experts, players such as Amazon and Walmart have invested enough in India to be serious contenders and are unlikely to cut back growth-oriented investments.

Interestingly, US Commerce Secretary Wilbur Ross at the recently concluded World Economic Forum’s India Summit had hinted that Amazon was cutting back on its spending in India, which was a third of what it spent in India last year, owing to uncertainties around the e-commerce policy.

Both Amazon and Flipkart have been incurring the wrath of small traders, who claim that e-commerce companies are offering deep discounts and pushing them out of business. The Confederation of All India Traders alleged that e-commerce companies were violating foreign direct investment policy.

After the recent festive sales the two companies are facing an investigation from Indian authorities for alleged predatory pricing. The Department for Promotion of Industry and Internal Trade has told the e-commerce companies to disclose the names of the top five sellers on their platforms, the price lists of goods of preferred vendors and the kind of support provided to sellers.

The department has also sent them a questionnaire seeking details regarding their capital structure, business model and inventory management systems. The companies have, however, denied allegations of involvement in deep discounting and claimed the discounts were offered by the brands.

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