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Flipkart co-founder Sachin quits after Walmart deal

11 May 2018

Accusing the Narendra Modi government of "naked betrayal" of all promises made by it on the issue of FDI in multi-brand retail sector over the proposed takeover of Flipkart by United States retail giant Walmart, CPI (M) said on Thursday that "Make in India has now become Make for India".

In this case, apart from domestic income tax laws, articles from a number of income tax treaties signed by India with the US, Singapore, Mauritius, South Africa, and a comprehensive agreement with China will also be invoked.

Walmart's acquisition of Flipkart has investors anxious.

With Flipkart and Amazon flush with cash to bolster their commercial arsenals, India's online market has now firmly become a strict duopoly, experts say, raising questions about the future of the third player in the market - Snapdeal.

What is interesting though is that all this action in the e-commerce space has made a mockery of India's rules against Foreign Direct Investment in retail; although those were nothing but crude protectionism in the first place.

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Walmart closed 60 stores in Brazil, 10 per cent of its outlets, two years ago and is trying to restructure its business.

The world's largest retailer Walmart Inc on Thursday tried to assuage concerns around its $16 billion takeover of Flipkart, saying the deal is good for India as it will help create millions of jobs over time and help the economy through local sourcing of goods by the company.

"Digitally powered e-Walmart will certainly vitiate the e-commerce and retail market".

"All of a sudden, everything is in play", said Dave Marcotte, an analyst at Kantar Retail. The U.S. company can not open physical stores in India, according to rules governing the multi-brand retail sector.

"The owner can dictate anything". Second important aspect is that the Owner can squeeze and dictate anything and as such being the virtual owner, the Walmart will always be in a position to dictate its terms and conditions.Thirdly, it is much more hard for the Govt to control & regulate foreign owned platforms particularly in e commerce sector which has no boundaries.

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He saw "no trouble" in getting regulatory approval needed from the Competition Commission of India (CCI) for the deal to buy 77 percent stake in Flipkart.

Flipkart is India's largest e-commerce marketplace.

In Brazil, a nation just coming back after a two-year recession and political unrest, Walmart has already closed stores, overhauled management and wound down its e-commerce platform. "These companies have been directly or indirectly participating in pricing and discounting, which is against the policy that seeks to create a level playing field", Retailers Association of India alleged.

More than $7 billion in investments fueled Flipkart's growth in India before a majority stake was flipped to Walmart for $16 billion on Wednesday. With this deal being hammered down, the total worth of Flipkart's employee stock ownership plans (ESOPs) has jacked up.

Walmart said it will continue to grow its wholesale cash-and-carry business, adding 50 new stores in the next four-five years. Last year, however, the company's valuation dropped to about $12 billion, and the duo lost their billionaire status. The acquisition was first announced by investor Softbank's CEO and founder Masayoshi Son followed by an official statement from Walmart. The deal will also include $2 billion of funding from new equity in Flipkart.

More news: Walmart Set to Announce Flipkart Deal Today

Flipkart co-founder Sachin quits after Walmart deal