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Amazon.com Inc. plans to invest an additional $3 billion into India, which is emerging as a critical area of growth for the e-commerce giant.

Chief Executive Jeff Bezos announced the plan at a meeting of business leaders Tuesday with the Indian Prime Minister Narendra Modi in Washington. Amazon sees "huge potential in the Indian economy," Mr. Bezos said in a statement.

The announcement brings Amazon's total planned investment in India to $5 billion, since it announced a $2 billion infusion in 2014. An Amazon spokesman declined to provide details such as how the new funds would be allocated or over what period.

Amazon operates a pure marketplace in India, due to local rules, selling only goods offered through its website by third parties. It nonetheless has warehouse and delivery technologies there that are particularly attuned to the local market, where internet connectivity can be spotty or nonexistent and many consumers don't have credit cards.

At the technology-focused Code Conference in California last week, Mr. Bezos said Amazon does most of its own deliveries to customers' doors in India, in contrast to the U.S. where it relies heavily on the U.S. Postal Service, United Parcel Service Inc. and others.

"We're adapting to the local model," Mr. Bezos said at that conference, noting Amazon has smaller and more numerous warehouses than other markets. In China, Amazon didn't sufficiently model its business to suit local preferences, he said, and the company has struggled to gain market share there.

Overall, Amazon's international segment, which includes all markets outside North America, is growing much more slowly than its home base. Overseas sales rose 5.7% in 2015 to $35.4 billion, compared with 25% in North America to $63.7 billion. Amazon also logged a $91 million operating loss abroad, compared with a $2.75 billion operating profit in its home market. Amazon doesn't break out results by country.

Amazon said last summer it planned to open a data center in India to serve what it said were tens of thousands of customers in the world's second-most populous country.

Amazon faces competition in India from local startups Flipkart Internet Pvt., which was valued at $15 billion as of last June, and Snapdeal.com, with a valuation of about a third of that, according to Wall Street Journal data.

Amazon's planned investment is especially large in comparison to India's still tiny, but rapidly growing online shopping market. Indians bought $16 billion worth of goods online last year, up from $6.3 billion a year earlier, according to Morgan Stanley estimates.

Amazon is injecting cash into its Indian arm at a time when its local competitors have found it difficult to raise cash. Investors have tightened the purse strings in recent months as startups burned through millions of dollars every month funding deep discounts on everything from smartphones to religious idols. In response, local e-commerce companies have reined back on discounts, laid off workers and reneged on offers to new hires in an attempt to start making a profit.

Sean McLain contributed to this article.

Write to Greg Bensinger at greg.bensinger@wsj.com

(END) Dow Jones Newswires

June 07, 2016 23:55 ET (03:55 GMT)

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