Amazon Considers Spinning Off India Unit and Exploring IPO, Report Says

Amazon, the American e-commerce giant, is reportedly considering spinning off its Indian division and listing it on the Indian stock market, according to a report by YourStory. The company is currently in the early stages of discussions regarding this move.

The report states that Amazon has consulted its Wall Street banking partner, JP Morgan, about the IPO and has also initiated talks with investment banks in India.

A source quoted in the report mentioned that Amazon’s motivation behind this decision is primarily data localization requirements and the ability to maintain direct inventory in India. "Amazon has begun discussions with bankers and is exploring the possibility of a spinoff and listing in India," the source stated.

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Regulatory Challenges and Market Dynamics

Under Indian regulations, only domestic companies can operate under the inventory-based e-commerce model, which facilitates quicker deliveries and reduced shipping costs. Foreign firms, however, must adhere to a marketplace model, functioning as intermediaries between buyers and sellers. This regulatory distinction has long been a challenge for Amazon, limiting its ability to compete effectively against domestic players like Flipkart and Reliance’s JioMart.

In addition to regulatory considerations, market conditions are also influencing Amazon’s strategy. India’s e-commerce industry has been expanding rapidly, driven by increasing internet penetration, smartphone adoption, and digital payment solutions. The industry is projected to reach $350 billion by 2030, offering immense potential for growth.

Last week, Amazon reportedly invited 8-10 investment banks for a call with senior executives from both India and the US. "These were very preliminary discussions," another source mentioned in the report.

Competition with Flipkart and Future Plans

This potential move comes as Amazon struggles to gain market share against Walmart-backed Flipkart, which dominates the Indian e-commerce sector, particularly in non-metro areas. Flipkart is already in the process of shifting its domicile back to India and is planning an IPO, likely in late 2025 or early 2026. If Amazon proceeds with its spinoff, it could strengthen its foothold in the Indian market and compete more effectively with local players.

Amazon has been making strategic moves to expand its business in India beyond traditional e-commerce. The company recently introduced Amazon Now, its quick-commerce service, in Bengaluru, allowing it to sell consumer electronics with faster delivery times. This move aligns with the growing trend of rapid-commerce services, as companies like Blinkit, Zepto, and Swiggy Instamart capitalize on consumer demand for instant deliveries.

Furthermore, Amazon has been heavily investing in its logistics and supply chain infrastructure across India, adding new fulfillment centers and increasing its warehousing capacity. By localizing its operations and securing an Indian listing, Amazon could potentially streamline its supply chain, reduce operational costs, and improve customer satisfaction.

Strong Performance in Consumer Electronics

Despite regulatory and competitive challenges, Amazon India has witnessed significant growth in key product categories, particularly in consumer electronics. The company has reported strong demand for mobiles, PCs, audio devices, and major appliances.

"We had a strong quarter and are pleased with how the year has started for us. Consumer electronics, including mobiles, PCs, audio devices, and major appliances, have shown robust double-digit growth, and we are encouraged by this momentum," said Zeba Khan, Director of Consumer Electronics at Amazon India, in a statement to Moneycontrol.

Amazon’s long-term commitment to the Indian market remains evident through its continuous investments, innovation, and expansion strategies. If the company successfully executes its spinoff and listing, it could mark a new phase in its India journey, allowing it to compete more aggressively in one of the world’s fastest-growing e-commerce markets.