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Why India is the next 'ecommerce battleground'

A handful of major US tech companies will be abuzz about India this year.

Facebook will persist in battling net neutrality debates to continue its “Free Basics” internet program there.

Google will try to convince local officials to let it fly its internet-bearing balloons in its airspace.

And, most notably, Amazon will continue to try to conquer its “trillion-dollar” online retail market.

In 2016, India will be “the next ecommerce battleground,” analysts from Bank of America Merrill Lynch write in a note summarizing all of their new year predictions.

Although Amazon made its intentions in Indian known throughout 2015 — participating in several profiles and commenting on its plans in company earnings calls — this will be a year of increased investments, BofA predicts.

Right now there are three big players in Indian ecommerce: Flipkart, Snapdeal, and Amazon’s subsidiary there:

ChartBank of America Merrill Lynch

Collectively, the three companies have received roughly $7 billion in investment, which is close to the size of the country’s entire ecommerce gross merchandise volume in 2014.

But the rush to establish market share can be attributed to where the country’s ecommerce market is going, not where it is now.

Right now, only 20% of India’s young population is online. Most retail takes place offline at mum-and-pop shops. But as wireless internet access and smartphone adoption spreads, BofA expects the online shopping market in India to reach $220 billion by 2025:

Amazon IndiaBank of America Merrill Lynch

But while 2016 will be marked by big investments, profitability will remain a distant goal.

Amazon IndiaBank of America Merrill Lynch

Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.

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