Amazon in early talks to spin off India division, and list here: Sources

Amazon, the world’s biggest ecommerce company, is looking to spin off its India entity and list it here in the country, two people with direct knowledge of the matter told YourStory.

Amazon, currently second in terms of market share in the country after Flipkart, has begun deliberations with investment banks in India, the people said, requesting anonymity as the discussions are private. The ecommerce giant invited investment bankers from the country, while it discussed the plan with JP Morgan, its banker on the Wall Street, the people added.

“Amazon has started discussions with bankers and is looking to spin off and list in India. The biggest reasons are data localisation and, more importantly, it can directly have inventory here,” said one of the sources quoted above.

“Amazon invited 8-10 investment banks last week for a call with their management. Top officials from India and the US were present and these were very preliminary discussions,” the source added.

A spokesperson for Amazon said the company does not comment on "rumours and speculations."

Indian regulations currently permit only domestic companies to adopt the inventory model in ecommerce. This model enables businesses to offer faster deliveries, maintain control over branding and quality, and lower shipping costs. In contrast, foreign entities are restricted to operating a marketplace model, which serves as an intermediary between buyers and sellers.

Although Amazon may not be able to transition to an inventory model immediately, spinning off and listing its India unit would pave the way for attracting more domestic shareholders. Over time, this could lead to majority ownership by domestic investors, a lawyer explained.

Amazon's consideration of spinning off its India unit and listing it in the country comes just months after a leadership change in its Indian operations. Over the past few years, the US ecommerce giant has struggled in India, losing market share to Flipkart, which currently dominates with around half of the country's ecommerce market. Additionally, Amazon faces growing competition from SoftBank-backed Meesho, which recently secured over $500 million in fresh funding.

Amazon also missed the early opportunity in the quick commerce segment. While it has begun pilot services in India, it now faces intense competition from newly listed Swiggy Instamart, Eternal-owned Blinkit, and the well-funded Zepto.

Meanwhile, Flipkart, Amazon’s biggest rival in India, has also started early discussions with bankers for a potential listing in the next 12-15 months. A report in The Economic Times in December said that the company is in the process of shifting its domicile to India from Singapore and will then eye an IPO.

However, The CapTable reported that Flipkart’s IPO might be delayed, as Walmart, the ecommerce giant’s majority shareholder, is prioritising PhonePe’s IPO first. Read the full story here.