Indian e-commerce rivalry heats up: Amazon and Flipkart announce big investments

Amazon has said it will invest $2 billion (£1.2 billion) to advance its operations in India.

The move comes a day after Flipkart, its Indian e-commerce rival, announced fresh investment of $1 billion (£590 million), the largest ever investment for an Indian Internet firm.

Amazon's latest announcement follows the partnership between itself and Twitter, allowing customers to buy Amazon products on the micro-blogging site through a custom hashtag.

Jeff Bezos, the chief executive of Amazon said, "We see huge potential in the Indian economy and for the growth of e-commerce in India. With this additional investment of $2 billion, our team can continue to think big, innovate, and raise the bar for customers in India."

He said that India is on track to be Amazon's fastest country ever to reach a billion dollars in gross sales. "A big 'thank you' to our customers in India – we've never seen anything like this," he added.

Amazon launched in India 13 months ago, and now sells over 17 million products, hosts over 8,000 merchants and has a network of warehouses across the country, with five more warehouses planned in Delhi, Jaipur, Chennai, Tauru and Ahmedabad.

Amazon's eReader and eBook store have been available in India since 2012.

Read more: Amazon lets Kindle loose in India.

Flipkart is currently the largest e-commerce retailer in India, having reached $1 billion in sales last financial year, with both Amazon and Snapdeal (India's second largest e-commerce retailer in terms of sales) targeting $1 billion in sales for 2014.

Flipkart is rumoured to be on track to reach over $3 billion in sales this financial year, and announced $1 billion worth of investment from a group of investors including Tiger Global and Naspers yesterday.