Amazon's pledge to invest $3 bn more in India

The negative sentiment surrounding the Indian e-commerce sector because of fund crunch, sluggish discount season, employee layoffs, and the valuation downgrade of Flipkart, has received a shot in the arm with Amazon's pledge to invest $3 billion in India.

The global retail giant will invest the amount solely for its India operations, taking the total investment in the country $5 billion. "I can assure you it’s only the beginning and as we say in Amazon, it’s only day one," Amazon chief Jeff Bezos said. Amazon's fresh investment in India could also be a move to tackle competition from the Chinese e-commerce giant Alibaba.com, which is set to enter India by the end of this year. Amazon may also use the funds to grow through acquisitions, a company official indicated.

At a time when the likes of Flipkart and Snapdeal are struggling with finances, Amazon's confidence in the market can further weigh upon these Indian startups, which are already losing market share to Amazon. As of March 2016, Amazon's market share has risen to 21 percent from 14 percent a year earlier. Compare this with the fall in market share of Flipkart to 37 percent from 43 percent and 14-15 percent from 19 percent during the period.

"The investment will go towards enhancing our customer and seller experience, as we have done over the past three years," Amazon India managing director Amit Agarwal said. Amazon's focus on customer service and service delivery have earned it the most visited tag with 30 million unique visits monthly. Flipkart's corresponding number is 27 million and Snapdeal's 20 million.