Walmart-Flipkart deal will create jobs, support 'Make in India': USISPF

A leading business group in the US has welcomed the clearance to American retail giant Walmart's proposed acquisition of Flipkart, saying it will support the Indian government's ambitious 'Make in India' initiative.

Competition Commission of India (CCI) yesterday said in New Delhi that it has cleared Walmart's proposed acquisition of Flipkart, a deal estimated to be worth $16 billion.

The approval comes less than three months after the announcement of the mega deal.

ALSO READ: Walmart plans to set up 15 new stores in UP, to create 30,000 jobs
The US-India Strategic Partnership Forum (USISPF), a new organisation set up to enhance business relations between India and the US, lauded the approval.

"The deal is good for India as a whole. It will strengthen the agriculture supply chain and create new skilled jobs, supporting the 'Make in India' initiative," the USISPF said in a tweet.

Why Walmart's Flipkart acquisition is its admission of defeat in India

Walmart Inc. might want to portray its $16 billion purchase of India's largest e-commerce firm, Flipkart Group, as a brilliant strategic move, long-planned in secret, that would allow the U.S. retail giant to manage the transition away from big-box stores globally. Yet, the truth is that the deal represents a second-best outcome -- if that -- for Walmart as well as for Indian consumers and farmers.

In the 11 years that Walmart has operated in India, it’s signally failed to build up its own business. That’s not entirely the company’s fault. In fact, it’s a reminder that India remains, in some ways, as inhospitable to foreign businesses as the People's Republic of China.

For over a decade, successive Indian governments have denied permission to Walmart -- and peers such as Carrefour SA -- to open up their own stores. Foreign investors can enter into partnerships with local retailers -- Walmart had one with Bharti Enterprises Pvt. Ltd. -- but they can't control the consumer-facing end of the business, and their supply chains are subject to fearsome additional regulations. When foreign investment in supermarkets was finally permitted in 2012, for example, the previous government required any major, foreign-backed outlets to source 30 percent of the processed or manufactured goods they sold -- by value -- from tiny Indian enterprises worth less than $1 million apiece. The government also blocked companies such as Walmart from expanding into small-town India, restricting them to cities with populations over 1 million people.

Walmart's Flipkart deal gets rude welcome from market, shares plunge 4%

Walmart Inc.’s deal to buy a controlling stake in India’s biggest online seller is meeting skepticism on Wall Street.

The world’s largest retailer will acquire a 77 percent holding in Flipkart Group for $16 billion, the companies said earlier Wednesday. Flipkart co-founder Binny Bansal and other shareholders will hold the remainder. The tie-up values the Indian e-commerce giant at about $20.8 billion and marks a blow against rival Amazon.com Inc. as the battle for e-commerce supremacy goes global.

The deal -- Walmart’s biggest ever -- gives it greater access to India’s e-commerce market, which Morgan Stanley has estimated will grow to $200 billion in about a decade. But it will take some time for the business to turn profitable, and analysts on a Wednesday morning call about the deal adopted a cautious tone. S&P Global Ratings changed its outlook on Walmart to negative.

“As Flipkart is expected to generate meaningful losses for at least the next few years, this is clearly an investment for the future,” Moody’s analyst Charlie O’Shea wrote in a note.

Walmart shares dropped as much as 4.2 percent to $82.12 as of 10:28 a.m. in New York -- the lowest intraday price since October. The company’s stock was already down 13 percent this year through Tuesday’s close.