Walmart to buy Control of Flipkart

Walmart to buy Control of Flipkart

Effects of Liberalisation; Indian startups

News:

1. Walmart has acquired stakes of Flipkart.

Important facts:

2. Flipkart is India’s first billion-dollar e-commerce company
3. Walmart is a US based company which first entered Indian market in a joint venture with Bharti Group in 2007
4. Recently, Walmart has acquired 77% stakes of Flipkart worth $16 billion. This is Walmart’s largest acquisition till date
5. The $16 billion investment includes $2 billion of new equity funding. This is expected to help Flipkart to achieve its growth potential
6. Walmart considers that with its acquisition of a controlling stake in Flipkart, India would serve as a key centre of learning global operations of the firm
7. Post Walmart’s announcement of acquisition of Flipkart’s stakes, share of leading retail firms have declined
8. Benefits:

• The deal is expected to facilitate the consolidation of markets and boost the retail sector
• The deal is also expected to help the retail sector to address the market need gaps
• New categories food and groceries are likely to receive more attention
• The deal may also serve as a push for Japanese investments in Indian companies

9. Criticisms:

• The Confederation of all India Traders has criticized the deal saying that this would allow Walmart to control and dominate India’s retail trade through e-commerce which is bridge to reach India’s offline retail market

10. For Walmart, the deal offers a big advantage as it allows tapping India’s retail market without building stores. However, competition with Amazon pose serious challenge for Walmart