India may become an important growth driver for Amazon, believes Founder and Managing Partner at Loup Ventures’ Gene Munster. He pointed out that the e-commerce giant, which has invested billions into India, saw a part of their opportunity, a really important growth driver, some of that window starting to close as a result of the Reliance-Future deal.
“When you think about Amazon and their growth profile, they just had wicked growth in the last six months, Munster told CNBC. “But you think about a normalized growth, you think about the impact of India, this could be 15 to 20 per cent of its growth over the next five years, India could be.” In January, it had announced investments of $6 billion in India, including a $1 billion pledge in January to help small businesses in the country. Moreover, the tech giant hopes to export $10 billion worth of India-made goods across the world by 2025.
Amazon won an injunction, on Sunday, from an arbitrator in Singapore to temporarily halt a deal between two major Indian retailers – Future Retail and Reliance Industries. However, the injunction as not automatically enforceable in India as it has to be ratified by the Indian court. In an official statement, Reliance said it intends to enforce its rights and complete the transaction in terms fo the agreement with the Future Group without any delay. According to Reuters, Future Retail had announced in August that it will be selling its business in retail, wholesale and logistics to Reliance for $3.38 billion, inclusive of debt. The e-commerce giant filed a lawsuit against Future Retail and alleged that it had breached contractual provisions it agreed to in a separate deal.
Munster said Reliance has the potential to win the dispute with the American company as it has more political strength in India. He added that the final outcome is unlikely to have any impact on Amazon’s share price because investors do not give sufficient credit to the opportunity in India.