The firm said India is on track to become “our fastest country ever” to reach $1bn in gross sales.
Amazon’s move comes a day after India’s largest e-commerce firm Flipkart raised $1bn in fresh funding, the largest ever for an Indian internet firm.
India’s total e-commerce market was worth $13bn in 2013.
But online travel accounted for more than 70% of the transactions.
According to research firm Forrester, online sales of retail goods were worth $1.6bn last year.
However, that number is expected to reach $76bn by 2021 as more people across the country get connected to the internet.
“We see huge potential in the Indian economy and for the growth of e-commerce in India,” Jeff Bezos, chief executive of Amazon, 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.”