Walmart, which is set to become a majority stakeholder in Flipkart in a $20 billion valuation deal, plans to invest $2-3 billion in the Indian e-commerce company. The investment will give a push to the company to strengthen its position against the rival Amazon.
After the initial investment, Walmart plans to bring more investors over the next few years.
Walmart is expected to get a 55-61 per cent stake in Flipkart, Alphabet will pick up around 10 per cent. The Japanese internet and investment conglomerate SoftBank will get an exit of $4 billion for its $2.5 billion investment in Flipkart eight months ago.
For its India-based strategy, Walmart plans to remain local and intends to work with local SMEs and the farm sector in the country. The American multinational retail corporation has followed a similar strategy in India for its wholesale cash-and-carry venture.
Despite the assurance of Walmart to keep Flipkart remain local, other kind of concerns have risen and that from the side of online sellers and political outfits.
Confederation of All India Traders (CAIT) and a political outfit Swadeshi Jagaran Manch has demanded a probe into the Walmart-Flipkart deal.
The traders’ body has claimed that the proposed deal if fructifies, will trigger loss funding and predatory pricing culture in Indian e-commerce space.
They also said that as Walmart failed to enter India in retail sector via FDI, now it has taken the e-commerce route which in future expected to harm the traders’ community. Earlier, the Bentonville headquartered company has been denied an entry into the B2C retail market, where it had hoped to open a chain of stores.
The development was first reported by TOI.