Amazon Jeff Bezos founder and CEO Jeff Bezos in June 2014. Reuters has said it will invest an additional $2bn in India in a bid to boost business in Asia's third-largest economy.

The e-commerce giant's announcement came a day after local rival announced a new round of funding worth $1bn (£590m, €746m).

Jeff Bezos, founder and CEO of said in a statement: "After our first year in business, the response from customers and small and medium-sized businesses in India has far surpassed our expectations.

"We see huge potential in the Indian economy and for the growth of e-commerce in India."

"With this additional investment of $2bn, our team can continue to think big, innovate, and raise the bar for customers in India. At current scale and growth rates, India is on track to be our fastest country ever to a billion dollars in gross sales. A big 'thank you' to our customers in India – we've never seen anything like this," Bezos added.

Next Frontier

Amazon's move signalled that the retail giant is in India for the long haul, Pragya Singh, associate vice president at leading Indian consultancy Technopak Advisors, told IBTimes UK.

"India is the next frontier for e-tailing and Amazon's decision reaffirms the global confidence in the subcontinent's e-tailing market potential. The retailer views India as a high potential market," according to Singh.

"While Amazon could not have taken a decision overnight, the timing of their announcement is getting much debated.

"The message [however] is very clear. Amazon is a serious contender in the Indian market and will continue to invest in this business to scale up rapidly," Singh said.

"Over the last one year, Amazon has steadily added on categories, increased its vendorbase and invested in building backend capabilities like logistics and warehousing. It has stepped-up its pace through mass media campaigns and faster delivery services. It is clear that Amazon is looking at India from a long-term perspective and being a global leader, it would seek to take leading position in India as well," she added.

Flipkart's Backers

Flipkart on 29 July said it had raised $1bn from existing and new investors in a deal that valued the homegrown e-commerce firm at over $5bn.

Existing investors Tiger Global Management, DST Global, and Accel Partners pumped in $500m while first-time investors GIC, ICONIQ Capital, and Morgan Stanley Investment Management injected the remainder, according to corporate data provider PrivCo.

Amazon's Indian unit said earlier in the week it will add five new warehouses in the country, which will nearly double its storage capacity to half a million square feet. At present, the firm operates two warehouses or so-called 'fulfillment centres' in India – located outside Mumbai and Bangalore.

Flipkart's valuation has rocketed 313% in the nine months since the October 2013 series E funding round, PrivCo said in a note to clients.