Why Amazon is eyeing an IPO in India
What's the story
Amazon, the world's largest e-commerce company, is considering a spin-off of its Indian division, YourStory has reported.
The move could pave the way for an initial public offering (IPO) in India.
The company is mulling a spin-off and listing here due to data localization requirements and the possibility of direct inventory management.
Indian regulations only permit domestic companies to go for an inventory model in e-commerce, limiting foreign players like Amazon to operate under a marketplace model.
Market dynamics
Amazon ranks number 2 in e-commerce here
Amazon currently ranks second in India's e-commerce market, behind Flipkart. The firm has been in talks with investment banks here as part of the spin-off process. However, the company has not publicly confirmed these discussions yet.
Strategic shift
Amazon's Indian operations and competition
The possible spin-off and listing of its Indian unit, follows a leadership change in Amazon's local operations.
The US giant has been losing market share to Flipkart, which now dominates nearly half of India's e-commerce market.
Amazon also faces tough competition from SoftBank-backed Meesho and quick commerce segment players like Swiggy Instamart, Blinkit, and Zepto.
Rival's moves
Flipkart's potential IPO and strategic shift
In related news, Flipkart, Amazon's biggest rival here, has also started initial talks with bankers for a potential IPO within the next 12-15 months.
The company, according to The Economic Times, is looking to change its domicile from Singapore to India and then go for an IPO.
However, The CapTable has reported that Flipkart's IPO may be delayed as Walmart prioritizes PhonePe's IPO first.