Amazon Increases Investment in India to $35 Billion by 2030

Amazon has declared plans to escalate its investment in India to $35 billion by 2030, marking an increase of approximately $20 billion from previous commitments. This announcement was made by Amit Agarwal, the company's senior vice-president for emerging markets, and is part of a strategy to enhance its quick commerce services while expanding across various business sectors. In total, Amazon has invested $40 billion in India over the past 15 years, which encompasses both foreign direct investment (FDI) and the reinvestment of profits generated from local operations in e-commerce and cloud services.

Agarwal noted that the company has experienced significant growth where its quick commerce service has been introduced, competing with established brands such as Blinkit, Swiggy's Instamart, and Zepto. The increased investment aligns with Amazon's earlier commitment by CEO Andy Jassy to invest $15 billion by 2030, primarily in artificial intelligence (AI) and cloud infrastructure through Amazon Web Services (AWS).

The new $35 billion investment will support various areas, including e-commerce, AWS, Prime Video, content creation, and financial services. Agarwal emphasised that the robust cash flow from Amazon's e-commerce operations enables the company to self-fund these investments. "Our e-commerce operations are generating strong cash flows, which allow us to self-fund our investments," he said. This strategic approach reduces reliance on external funding while enabling continued growth.

By 2030, Amazon aims to facilitate the creation of 3.8 million jobs in India and anticipates a total investment of $75 billion. Agarwal reiterated that Amazon is the largest foreign investor in India, highlighting that between 2010 and 2024, the company has invested $40 billion. He stated, "We are the largest foreign investor here and one of the largest job creators."

Amazon's renewed focus on AI and local cloud infrastructure coincides with similar announcements from other major US tech companies. Recently, Microsoft revealed plans to invest $17.5 billion in India over the next four years, marking its largest investment in Asia, aimed at enhancing AI infrastructure and skills.

Strategic Expansion Plans

Agarwal explained that Amazon's quick commerce initiative primarily targets areas with a significant concentration of Prime members, the company's subscription-based loyalty programme. "Our expansion isn’t tied to a fixed city count; it’s centred on Prime-dense clusters," he stated. The company currently operates 300 micro-fulfilment centres, known as dark stores, and is adding two new centres daily in major cities such as Bengaluru, Delhi-NCR, and Mumbai. Agarwal pointed out that customer acquisition and supply chain costs are already optimised due to Amazon's existing infrastructure.

Despite the competitive landscape, Agarwal expressed confidence in Amazon's position, noting that the company has demonstrated exceptional performance in regions where the quick commerce service has been launched. According to Bank of America Research, Blinkit holds over 50% of the quick commerce market share, with other players like Zepto and Swiggy's Instamart sharing the remainder.

Recent developments also indicate that Amazon's various business units have successfully reduced losses and improved operational efficiency. Over the past fiscal year, each of Amazon’s major business segments reported a significant reduction in losses, aided by cost management strategies that included cuts in advertising and employee expenses.

AI Integration and Job Market

In line with the increasing integration of AI, Amazon has focused on improving productivity through technology, even as the company has recently undertaken job cuts globally due to an AI-driven restructuring. This has resulted in approximately 1,000 job losses in India, although Agarwal noted that the company continues to hire in key areas to foster innovation. "Andy Jassy has said publicly that we want to be the biggest startup. To operate that way, we need fewer layers," he explained.

Amazon also intends to quadruple its exports target to $80 billion by 2030. Since launching its global selling programme in 2015, the company has enabled $20 billion in exports, fostering growth despite potential challenges posed by international trade relations. Agarwal stated, "While there might be temporary issues sellers have to manage, we have seen tremendous momentum."

With a thriving ecosystem for technology and innovation, India is becoming an increasingly attractive market for global tech giants. Amazon's latest investment commitment underscores its commitment to furthering its presence in this rapidly evolving landscape, promising substantial contributions to the economy and job market in the coming years.