Flipkart deal will kill retail: CPI(M)

Following Walmart’s $16 billion deal with India’s largest e-commerce site Flipkart, eBay has announced its decision to sell its stake in Flipkart in an official statement released Tuesday.

This feels like a watershed moment for Indian e-commerce.

E-commerce is getting increasingly competitive in the United States, and Morgan Stanley analyst Simeon Gutman thinks Walmart should be investing more in the USA. The Flipkart-Walmart deal further attracts global investors to roam the merger fields for potential assets (read BigBasket, UrbanLadder etc).

This deal will certainly have disruptive effects for the Indian markets and consumers.

Flipkart is India’s largest e-commerce marketplace. McMillon has led Walmart’s efforts to boost global business. The seller community had previously rued that they were not kept in the loop on the protracted talks that had been going on between Walmart and Flipkart for many months, before the deal was sealed. “Offline players such as Future Retail and Avenue Supermarts will sharpen focus on their hyperlocal offerings”, Kotak said.

The deal, he said, will also have positive impact on FDI investments into the country.

CAIT Secretary General Mr. Praveen Khandelwal said that key issues of the matter is whoever controls the platform control data and digital intelligence.

“The owner can dictate anything”. While this could result in Walmart’s investment stake moving lower after the transaction is complete, Walmart would retain clear majority ownership.

“After assessing the deal, we will either represent to government or to the Competition Commission, or we will go to court”, he added. “Our investment will benefit India providing quality, affordable goods for customers, while creating new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs”. The CPI (M) said on Thursday that the deal facilitates the back-door entry of foreign capital to take over India’s huge multi-crore retail trade sector.

The acquisition of Flipkart is the latest in a series of deals by Walmart in recent years to help the company compete for customers with e-commerce industry leader Amazon.

Walmart buys Flipkart: Higher Variety, Lower Prices? While such investments have enabled Flipkart to expand its business and boost revenues, the company lost $1.3 billion during its fiscal year 2017.

It has been told to Walmart that since the company (Flipkart) derives a substantial value of its shares from the assets held in India, it would be liable for taxation in the country, as per Zee Media reports. The change in SoftBank’s position is in contrast to the statement Son made in Tokyo to investors and journalists after his company’s earnings call on Wednesday.

In case SoftBank decides not to sell, Walmart would be left with about 55 percent of Flipkart. Accel put $8 lakh into the company in 2008, the first major check that Flipkar would receive.