Update: The Economic Times reports that Amazon will hire around 3300 people in Hyderabad, and invest around Rs 500 crore (around $100 million at current rates) over three years.

Earlier (November 9th): Amazon is planning to launch a marketplace in India, MediaNama has learned from multiple industry sources. Prabhakar PJ, responsible for Business Development at Amazon.com, on being contacted declined to confirm or deny the development.

According to our sources, the company is tying up with multiple e-commerce ventures to feature their products on the Amazon India website, an e-commerce venture tying up with Amazon told us on condition of anonymity. Retailers have to provide XML based feeds of their products to Amazon, customized to Amazon’s categorization, and on completion of the sale, they will be responsible for delivery. Each retailer will be reviewed and rated by customers.

What’s interesting here is that Amazon is going to manage the payments, according to our sources, take a commission that could be around 2% to 7%, but could be higher for apparels. Amazon will manage the front end, and it is likely that there will be no cash on delivery option. Another source suggests, however, that Amazon is in talks to acquire a logistics company.

So why will some Indian e-commerce ventures tie up with Amazon instead of competing with it? One source says that Amazon’s traffic from India is much higher than that for Indian e-commerce ventures. For a commission, they get sales.