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. -China direct foreign investments declined by nearly one-third in 2017 from the prior year as criticism over national security grew. Compared to more mature e-commerce markets like China and the United States, e-commerce penetration in India is relatively small. "They have finally started taking corrective action and are now dedicating their resources to where they think they can grow", said Burt Flickinger, managing director, Strategic Resource Group. The same logic applies to the other so-called "Indian" success stories - PayTM, Ola, Snapdeal, among others, which are also founded in India but run largely on foreign money.
"In the early days, trust in anything online was virtually non-existent in India". It will further kill the "Make in India" dream too, he said, referring to Modi's ambitious manufacturing policy.
"This investment is of vast 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", said Binny Bansal, Flipkart's Co-Founder and group Chief Executive Officer. The government looks for single brand companies to get 30 percent of its goods from India.
Looking at the broader e-commerce market in India, the sector has become an attractive vehicle for investment for a number of reasons.
Walmart will soon reach shoppers in India's massive consumer market directly, as it takes control of the online retailer Flipkart that's known for its ubiquitous delivery drivers on motorcycles with oversized backpacks.
The CPI (M) said it was common knowledge that Walmart sourced its products from global markets and now these will be sold in India, further destroying the small scale and medium scale sector which is the largest provider of employment after the agricultural sector.
"Even so, the company would retain clear majority ownership", Walmart said. "We don't need a photo-op", he said. Walmart's buyout of Flipkart helps Tiger Global cover for all its bets in India.Similarly, Accel Partners, the first institutional backer of Flipkart which have pumped in close to $100 million in the company over the years, have raked in an approximately eight-fold return. According to Indian business channel CNBC -Tv18, Amazon offered to buy 60% of Flipkart, following the growing influence of WalMart. It will strengthen the agriculture supply chain and create new skilled jobs, said Aghi to CNBC over email.