Amazon.in in India is a Marketplace. Unlike US, Amazon does not sell anything directly to consumers. You will see "Full-filled by Amazon". This in fact presents great opportunity to local and far flung businesses who did not had access to market.

The foreign direct investment in retail sector is not all open in India. Also as far as I know, most companies can't move huge amount of money to mainland easily. Double taxation is one thing but there are other problems that forces companies to invest locally.