The USD 16 billion (Rs 1.05 lakh crore) Walmart-Flipkart deal will have a positive impact on India's foreign investment inflows, NITI Aayog Vice Chairman Rajiv Kumar said on Thursday.
The immediate focus for Walmart will be on serving customers and expanding Flipkart's business, Walmart supports Flipkart's ambition to transition into a publicly-listed, majority-owned subsidiary in the future.
India is one of the world's fastest growing online retail markets, and Walmart's 77 percent investment in Flipkart ensures its presence in a market which is set to hit $73 billion a year by 2022, with an increase in smartphone users. The news comes following months of speculation that the Walmart deal will result in the departure of one of the founders of the company. But the Walmart deal must have enthused everyone as it valued the company at almost $21 billion, a windfall for shareholders.
Meanwhile, Walmart's foray into India's online retail space made industry expects say the deal would make India an attractive destination for global majors to invest in the e-tail segment. McMillon has led Walmart's efforts to boost worldwide business.
Flipkart's co-founder and now CEO, Binny Bansal said "This investment is of huge importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India". Amazon holds about 27% of India's burgeoning e-commerce market, according to Euromonitor, where Walmart only operates 21 cash-and-carry wholesale stores in the country that sell to businesses. Walmart now operates 21 Best Price cash-and-carry stores and a fulfillment center in 19 cities across nine states in India, which will continue to be led by Krish Iyler, President and Chief Executive Officer of Walmart India. Walmart Inc.is an American Multinational retail corporation which is world's largest company in terms of Revenue.
And, in 2018, Flipkart joined Walmart, when Walmart Inc announced on 9 May it had signed definitive agreements to become the largest shareholder in Flipkart Group. "Most of these small entrepreneurs are already battling for their existence; entry of Walmart will further create problems for them", the co-convenor of the manch said in a letter to the prime minister. The deal will cut into Walmart's overall earnings by about 60 cents per share next year. "We have met before and I am sure will meet again".
"It is pretty clear that this (deal) is good for customers and would create jobs and help society", he said at a select media roundtable. While such investments have enabled Flipkart to expand its business and boost revenues, the company lost $1.3 billion during its fiscal year 2017. Amazon is now the biggest rival of Flipkart in the e-commerce market. "The deal will affect India's retail business in the long run".
The factor daily report quotes that, "With the cash component to be close to 55% it will cause the exit of some of the investors in Flipkart".
"We all know that they have interests in the multi-brand retail of food and a combination of both will kill the interests of farmers", he said.