Wednesday, 13 July 2016

Amazon to Invest $3 Bn in India - How Will This Benefit The Textile Industry?

Narendra Modi with Jeff Bezos

The Founder and CEO of the e-commerce giant Amazon, Mr. Jeff Bezos recently announced the company’s plan to increase their investment in India by a whopping 3 million. This will bring the overall investment capital of the e-portal in India to over $5 Billion.

The announcement was made at the annual gala in Washington hosted by the US India Business Council (USIBC), in the presence of Indian Prime Minister Mr. Narendra Modi.

Bezos continued the announcement and sited the fact that Amazon has by far created over 45,000 across India and see a huge potential for growth in the Indian economy. It has been speculated that this investment boost in India by Amazon is a result of the e-commerce major’s pull back from China. It is known that Amazon constantly faces fierce competition from the local giant Alibaba Group Holding Limited, as well as JD. It was the same reason for which Wal-Mart had to sell off its Chinese online flagship Yihaodian to JD.com.

However, this can be considered a bold move on the part of Amazon India, since the local market leaders of the likes of Snapdeal and Flipkart are currently holding the cash flow and concentrating on unit economics. As of the current statistics, Flipkart still maintains its position as the leader when it comes to the highest market share. As far as Snapdeal is concerned, it now lies behind Amazon with respect to the number of shipments. While this is a fairly impressive start for Amazon India, the fact remains that Amazon is not only looking at India in terms of the large consumer base, but is also eyeing the nation from which products can be directly sourced at rather competitive rates and sold across the globe to Amazon’s exceedingly large global clientele.

And this is exactly where the Indian Textile Industry fits the bill. As is known to all, India is a pioneer in textile manufacturing and with Amazon trying its level best towards becoming a ‘middleman’ and facilitating sale of textile goods and apparels to its customers in USA and Europe, it is only fair to assume that the nation’s textile sector will see a tremendous growth in the near future.

That being said, it remains a subject of speculation and major concern that will this step simply help in the growth of the textile sector, or will result in an overall plunge in the profit ratios of the Indian manufacturers given the fact that a substantial chunk of the profits will be taken away by Amazon pertaining to overheads and/or commission.