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Why Amazon Is Pouring $2 Billion into India, in Three Charts

The number of Internet users and smartphone owners is booming in the world's second-most populous country.

Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

What’s cooler than a billion dollars?

On the heels of a rival’s billion dollar investment, Amazon said it would pump another $2 billion into its own burgeoning Indian online storefront, the company announced today.

“At current scale and growth rates, India is on track to be our fastest country ever to a billion dollars in gross sales,” CEO Jeff Bezos said in the statement.

The timing of the announcement comes a day after the most popular Indian e-commerce site, Flipkart, confirmed a $1 billion funding round. Add to that eBay’s increased investment in eBay India as well as its giant investment in Flipkart competitor Snapdeal, and it’s clear the Indian online retail market is on fire.

Why? The online retail market is relatively tiny today — with $3.2 billion in sales estimated for this year — but it is ramping up quickly, with at least 50 percent year-over-year growth expected in each of the next four years. Here’s what its growth looks like.

That growth in e-commerce sales is expected to be fueled in a big way by a boom in shopping on mobile devices. Earlier this year, Snapdeal CEO Kunal Bahl told Re/code that about 30 percent of his company’s gross sales were taking place via mobile phones. He expects that number to only grow as the pace of smartphone adoption increases in the country.

Despite a population about four times the size of the U.S., India still lags our country in smartphone users. But as the chart below shows, that trend is expected to change considerably over the next five years. By 2016, India is slated to surpass the U.S. in smartphone users and tally about 50 million more smartphone owners than the U.S. by 2018. Here’s a look at the country’s coming smartphone boom.

And, of course, in order to shop online, Indian consumers need an Internet connection. Here’s a look at Internet user growth over the next five years compared to the U.S.

India’s e-commerce moment appears to be approaching. And Amazon, eBay and India’s biggest homegrown sites are amassing war chests for the minds and wallets of the next great online retail market.

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