Amazon to invest US$1bn to digitize Indian SMBs

Amazon.com, Inc announced on January 15 that it was planning to invest US$1 billion to digitally enable micro, small, and medium enterprises (MSMEs) and traders across India, including manufacturers, local brands resellers and offline shops. The move, announced by the founder and CEO of the e-commerce and technology giant Jeff Bezos, is expected to enable US$10 billion worth of cumulative exports by Indian businesses through the Amazon platform by 2025. The investment, which aims to digitise 10 million MSMEs, will also establish 100 “digital haats (markets)” in cities and villages across India. Mr. Bezos was addressing a gathering of over 3,000 MSMEs at the inaugural Amazon SMBhav Summit in New Delhi.

The announcement comes at a time when the consumer durables market in India is expected to record US$23 billion in online-influenced sales over the coming five years, as per a July 2019 report by Boston Consulting Group and Google India. The percentage of digitally influenced sales in the Indian consumer durable industry more than doubled over the last five years, and in the next five years, it is expected that 63 per cent of overall consumer durable sales will be digitally influenced. Amazon’s investment is also relevant from the perspective of Indian MSMEs as they are being empowered to contribute US$2 trillion to the national economy in the coming five years. This strengthens India’s US$5 trillion GDP target.

In 2019, Indian set up 65,312 new micro-enterprises that created 522,496 new job opportunities. This was accomplished by the steps taken by the Ministry of MSME which during the year enforced measures to usher in technological advancement, skill development, improved financing and market creation for the empowerment of MSMEs. Currently, more than 550,000 Indian businesses are selling on the Amazon marketplace and over 60,000 sellers are exporting their “Make in India” products worldwide. Today, the capabilities of Indian MSMEs span across space and defence technology to food and healthcare. On the back of such enterprises, India is likely to emerge as one of the strongest economies in the world. 

While making the announcement, Bezos said that Amazon was committed to being a long-term partner of India. He added that the latest investment would “expose the world to ‘Make in India’ products that represent India’s rich, diverse culture.” Meanwhile, the digital haats, to be set up in 100 cities, villages, and communities, will help businesses integrate into the digital economy, Amazon said. The haats will provide services like e-commerce onboarding, imaging and cataloging, warehouse space, logistics, digital marketing, and compliance. The move can prove critical to India’s target of driving financial inclusion.