India is increasingly becoming a choice destination for American big tech companies. Last year, Google, Facebook, and Qualcomm notably invested in the Asian country as its booming population makes it an attractive market. This year, Amazon is joining the party.
Amazon is opening its first manufacturing line in India in a partnership with Foxconn-owned Cloud Network Technology, an India-based subsidiary of the Taiwanese electronics giant, Amazon announced on Tuesday.
“Tamil Nadu has been an essential partner for Amazon India & we are excited to launch our 1st manufacturing line in Chennai. This contributes directly to the local economy & showcases India’s ability to produce world-class products,” Amazon tweeted on Tuesday.
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The partnership is part of an effort to work with the Indian government, which has embarked on a campaign to encourage companies to invest in the Indian economy to avoid roadblocks, like high import taxes to enter and competing in the country’s competitive and fast-growing economy.
The Indian government calls its campaign to encourage local investment and growth in India-based enterprises “Aatmanirbhar Bharat,” which translates to “self-reliant India” and has become a cornerstone of Prime Minister Narendra Modi’s economic policy since its official introduction last year.
Ravi Shankar Prasad, the country’s minister for communications, electronics, and information said in a statement: “We welcome Amazon’s decision to set up a manufacturing line in Chennai, as it will enhance domestic production capacities, and create jobs as well.”
According to Amazon, the Chennai line will be capable of producing hundreds of thousands of devices every year, starting with the Fire TV line of streaming devices. The company says it will “continuously evaluate scaling capacity to additional marketplaces/cities depending on the domestic demand.” The announcement comes a year after Amazon said it would begin investing as much as $1 billion in local Indian businesses.
“Amazon is committed to partner with the Indian government to advance the vision of an Aatmanirbhar Bharat,” said Amit Agarwal, Amazon’s global senior vice president of Amazon India, in a statement. “We have pledged to invest US $1 billion to digitize 10 million small and medium businesses, help Indian businesses sell worldwide thereby enabling US $10B in cumulative exports, and create an additional 1MM jobs by 2025.”
Amazon’s heavy investment in India is more evidence of the country’s growing significance as both a prime market for Western consumer electronics and as a manufacturing center that can compete with China and other fast-growing production hubs. It’s also a sign that Modi’s aggressive foreign and economic policymaking is translating to successful infusions of outside investment, as Amazon, it seems, would rather create local jobs and work with established production partners than face potential restrictions on reaching Indian customers.
Since last year, Modi has been pushing an aggressive digital campaign that is aimed at economic development that will help India stand up to China. Mukesh Ambani, India’s richest man has been working on many fronts to keep the digital market’s lion share. In partnership with Silicon Valley’s big names, the Reliance behemoth has set off with a development plan for the digital economy in line with Modi’s vision.
However, India has kept attracting more interest and increasing competition.
In 2020, Amazon announced the ‘Local Shops on Amazon’, a program that helps retailers and local shops be Atmanirbhar, and benefit from selling online.
“We have over 22,000 neighborhood stores registered across the country gathering additional footfalls through their online presence and furthering their earning potential by acting as pickup points, logistics partners, and experience centers for e-commerce,” Amazon said.