Is India the new Silicon Valley? Amazon ups investment to $5 billion

The additional $3 billion Amazon committed to India on Tuesday will open a new development center in Hyderabad, alongside one Apple plans to build. 

Yuri Gripas/Reuters
Indian Prime Minister Narendra Modi presents the Global Leadership Award to Amazon Chief Executive Jeff Bezos at the US-India Business Council in Washington, June 7, 2016. Mr. Bezos committed an additional $3 billion in the country.

India is the new Silicon Valley. At least that’s how Amazon sees it.

The e-commerce powerhouse will invest another $3 billion on top of the more than $2 billion it committed to the country last year, Chief Executive Jeff Bezos announced Tuesday in Washington.

With Indian Prime Minister Narendra Modi in attendance, Mr. Bezos said the South Asian country is Amazon’s fastest growing region, reported Reuters.

“I can assure you it’s only the beginning, and as we say in Amazon, ‘it’s only day one,’” said Bezos. He said the investments will spur startups in India, and accelerate the country’s role as a “hub for innovation and digital entrepreneurship,” wrote Reuters.

The announcement comes as Amazon’s domestic competitors have fumbled to raise cash there, leaving the e-commerce market open for the taking. Even so, the impact Amazon’s investments could have on the Indian economy could be revolutionary. Amazon’s growth there, in addition to investments Apple committed to the country in May, could elevate India to one of the tech capitals of the world, alongside Silicon Valley, Boston, London, and Beijing.

Part of Amazon’s plan for India is to expand its cloud services there, the online retailer’s most profitable division. Bezos said Amazon plans to open a Web Services Cloud Region in the country this year. Amazon describes a "cloud region" as "a physical location in the world where we have multiple Availability Zones. Availability Zones consist of one or more discrete data centers, each with redundant power, networking and connectivity, housed in separate facilities."

India would also become home to the firm’s largest software engineering and development center outside of the US, said Bezos. The center would be in Hyderabad, alongside the development center Apple plans to open for Map apps for the iPhone, iPad, Mac and iWatch, wrote CNET in May. Apple’s facility will create 4,000 jobs, said CEO Tim Cook.

"The talent here in the local area is incredible and we are looking forward to expanding our relationships and introducing more universities and partners to our platforms as we scale our operations," said Mr. Cook, according to CNET.

Amazon’s development center in Hyderabad would also create a “significant” number of jobs over time through Amazon Cloud Services, said Bezos. An Amazon spokesman declined to tell The Wall Street Journal how the more than $5 billion would be allocated or over what period.

India is already an emerging global technology hub. With investments from Amazon, Google, and Apple, Hyderabad will only contribute to India’s startup scene centered in Bengaluru. During a December visit, Google CEO Sundar Pichai announced a program to train 2 million developers in the country, for which it will partner with 30 universities across India. The Indian-born CEO also shared plans to expand free WiFi in 100 railway stations and a rural internet program for women from pilot to full-scale program to cover three lakh villages in three years, The Hindu Times reported.

Amazon’s investment will also serve its own, e-commerce interests. It could position Amazon to take over the Indian online retail market from startups Flipkart Internet Pvt. and Snapdeal.com. Bezos’s announcement comes as the Indian companies have failed to raise additional cash, after they burned through millions of dollars every month to fund deep discounts, wrote The Wall Street Journal.

Amazon and Apple’s commitments to India also play into the country’s vision for its own future, as The Christian Science Monitor wrote in March.

With plenty of fanfare in Delhi, Indian Prime Minister Narendra Modi announced in January the $1.5 billion Start-up India to enhance India's economic growth and expand Internet access nationwide.

It seems that Mr. Modi rightly believes in the power of technology to facilitate his country's economic development. Increased connectivity can help Indians deliver goods and services across the country and participate in the global economy.

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