Amazon has decided to infuse fresh funds of $300 million to optimize their Indian operations. Besides improving their logistics and products portfolio, Amazon India will provide loans to thousands of SMEs and entrepreneurs in order to help them expand their businesses.
This fresh lease of funds is being seen as part of Amazon’s commitment of infusing $2 billion in Indian operations. With this fresh investment, total investments done by Amazon has reached Rs 4800 crore.
Gopal Pillai, general manager-seller services at Amazon India said, “Access to working capital is the biggest hurdle for sellers. With this we are minimizing the fiction and barriers for the sellers to get loans and helping them focus on growing their business on our platform,”
In fact, as per reports emerging, Amazon India has already started inviting qualified merchants to get included in this program, to get benefitted from their new financial program.
Last year in August, Amazon had started offering SME loans under their Amazon Lending platform. Loans were programmed for a period of 6-12 months, and Amazon has a solid monetization procedure from the interest generated. The amount of loan which would be dispersed range between Rs 2 lakh and Rs 5 crore; and Amazon will charge interest between 13-15% for the same.
In India, Amazon has around 65,000 sellers, who are active; and as per reports emerging, the loans would be approved within 5 days for them. Interestingly, India is only the 3rd country where such attractive ‘SME Loan’ program has been launched by Amazon: USA and Japan are the only countries where this is being run.
Considering the fact that 41% of Indian SMEs do not get approved for any type of loan from banks/financial institutions (as per KPMG report); this is indeed an excellent step by Amazon. As per ET, this is a step to fill in the gap of Rs 2.93 lakh crore which Indian SMEs face right now.
Earlier, Amazon had tied up with BankBazaar.com to enter the financial services market in India, and the provision to offer startup loans can be seen as part of this endeavor.
Besides Amazon, other ecommerce portals such as eBay, Paytm, Snapdeal and Alibaba have already started/aims to start special SME financial schemes to help their sellers get more business.
Overall, this can be described as a positive step towards encouraging entrepreneurship in India.