According to Rajiv Kumar, the Vice Chairman of NITI Aayog, the $16 billion mammoth deal between Walmart and Flipkart will have a positive impact on the country’s foreign investment inflows. He also noted that the deal is in line with India’s foreign direct investment (FDI) norms and Walmart will help small businesses in the country procure goods at a cheaper price.
These comments come at a time when RSS-affiliate Swadeshi Jagran Manch raised concerns about the entry of Walmart into India. The organisation’s convenor wrote a letter to the Prime Minister stating that Walmart’s entry into India will create problems for small and medium businesses and their ability to create jobs. It also sought the PM’s intervention in this issue in a bid to safeguard the national interest.
After months of speculation, the deal between Walmart and Flipkart got finalised last Wednesday (May 9th). Walmart announced the acquisition of 77% stake in Flipkart for $16 billion in a deal touted to be the largest e-commerce deal in the country. With this acquisition, Walmart has now gained entry into the Indian e-commerce space.
Flipkart’s main rival Amazon also made a bid to acquire it for the same price valuation. However, Flipkart’s board chose Walmart since the deal was more likely to succeed without any regulatory concerns.
Walmart is a $500 billion retail company with presence in multiple countries across the world. Though it is a major player in the retail space, it still lags behind Amazon in the e-commerce space. This deal is likely to give Walmart the much needed advantage to gain expertise in the e-commerce industry.
NITI Aayog welcoming the deal is indicative of the government’s support since the organisation is chaired by the Prime Minister himself. NITI Aayog, also known as National Institution for Transforming India, is a think tank established by the government of India to achieve sustainable development goals.