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Why Would Amazon.com Inc. (AMZN) Invest $3 Billion In India?

Amazon.com Inc (NASDAQ:AMZN)

Amazon.com, Inc. sees “huge potential in the Indian economy.” The firm is planning to spend $3 billion to make expansion in the country. The new investment was announced by Amazon CEO Jeff Bezos at a summit in Washington, which was attended by Indian Prime Minister Narendra Modi. The online retailer announced a $2 billion investment two years ago. The company employees more than 40,000 people in the country.

Amazon.com Inc (NASDAQ:AMZN)

Bezos said that Amazon performance is “surpassing even our most ambitious planned milestones” in India. Amazon wants more small businesses in India to use its platform to sell. The company is investing money to encourage more people to online business.

It seems that the company also sees a space for Amazon Web Services. Bezos said that they plan to open a Web Services Cloud Region in India in 2016. The company is also planning to build a software engineering and development center in Hyderabad.

Morgan Stanley Research said that the Indian e-commerce market is estimated to be worth $119 billion by 2020.

Last month, Apple announced that it will open a new office in Hyderabad to build Maps for iOS, OS X and watchOS. The iPhone maker is also setting up an app design and development center in the Bangalore.

In India, Amazon’s big competitors are Flipkart and Snapdeal. They must be worried about Amazon’s big investment announcement, which came in at a time when both retailers are struggling to raise new funds to expand their businesses.

Promoting E-Commerce in India

In a letter to shareholders in April, Bezos explained how Amazon is working to promote e-commerce in India. He said that the company built tools that empower entrepreneurs in 172 countries to reach customers in 189 countries last year.

“India is another example of how we globalize an offering like marketplace through customer obsession and a passion for invention,” Bezos said in the letter.

Last year, Amazon.com, Inc.  launched a program called Amazon Chai Cart in India, deploying three-wheeled mobile carts to visit navigate in a city’s business districts, serve tea, water and lemon juice to small business owners and teach them about selling online.

“In a period of four months, the team traveled 15,280 km across 31 cities, served 37,200 cups of tea and engaged with over 10,000 sellers. Through this program and other conversations with sellers, we found out there was a lot of interest in selling online, but that sellers struggled with the belief that the process was time-consuming, tedious and complex.”

In February, the online retailer launched Amazon Tatkal, which enables small businesses to get online in less than 60 minutes. This services provides a suite of launch services including registration, imaging and cataloguing services, as well as basic seller training mechanisms. It is now being offered in 25 Indian cities.

Amazon Expands in Europe

Last week, Amazon.com, Inc.  announced that it will create 500 new jobs in Dublin, Ireland, over the next two years. This announcement is part of the company’s plans to create several thousand more new jobs in Europe in 2016. The firm is looking for tech professionals, including data center technicians, software engineers and customer support staff. Amazon created 10,000 new jobs at the company across Europe in 2015. The company currently employs over 40,000 people across Europe.

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