Gadgets

Walmart may exit Flipkart due to new FDI rules: Morgan Stanley

Agency | February 05, 2019 01:51 PM

NEW DELHI: Retail giant Walmart may exit Flipkart after India's new Foreign Direct Investment (FDI) norms for e-commerce companies came into force, US investment banker Morgan Stanley has warned.

"An exit is likely, not completely out of the question, with the Indian e-commerce market becoming more complicated," the report by Morgan Stanley said late Monday.

According to the report, Walmart-Flikkart saga might turn out to similar to what happened with Amazon in China in late 2017.

"There is a precedent for an exit as Amazon retreated from China in late 2017 after seeing that the model no longer worked for them," the report read.

"We estimate that Flipkart derives 50 per cent of its revenue from this category, meaning Flipkart could face meaningful disruption and top-line pressure in the near term," it added.

The new FDI rules may require Flipkart to remove as much as 25 per cent products from its platform including smartphones and electronics that constitute a bulk of sales, said Morgan Stanley.

On February 1, disruption was caused in the e-commerce operations in India of the two companies after the new FDI norms for the e-commerce sector came into effect.

The norm prohibited the online retailers from mandating any company to sell their products exclusively on its platform.

In the new policy, the Commerce Ministry also noted that the online retail firms would not directly or indirectly influence sale price of goods and services and would maintain a level playing field.

Amazon India had to withdraw many of its products and they were listed as "currently unavailable" as the new norms prohibit the e-retailers from selling products of companies in which they have stakes.

The two companies have together lost market capitalisation of $50 billion.

Amazon lost market capitalisation of over $45 billion on Nasdaq while Walmart lost over $5 billion on the NYSE.

Have something to say? Post your comment
Must Read
Capt Amarinder approves names of five eminent sportspersons for PIS Governing Council
Capt Amarinder approves names of five eminent sportspersons for PIS Governing Council
Delegation of UK youth lauds Punjab government for CYR program to enable them to know motherland of their forefathers
Delegation of UK youth lauds Punjab government for CYR program to enable them to know motherland of their forefathers
Children with mild asthma can use inhalers as needed: Study
Children with mild asthma can use inhalers as needed: Study
Bihar CM Nitish Kumar, J-K Governor Satya Pal Malik visit Arun Jaitley at AIIMS
Bihar CM Nitish Kumar, J-K Governor Satya Pal Malik visit Arun Jaitley at AIIMS
RuPay launched in Bhutan, 9 MoUs exchanged between New Delhi, Thimphu
RuPay launched in Bhutan, 9 MoUs exchanged between New Delhi, Thimphu
Ravindra Jadeja, Poonam Yadav among 19 sportspersons nominated for Arjuna award
Ravindra Jadeja, Poonam Yadav among 19 sportspersons nominated for Arjuna award
PM Modi launches RuPay card in Bhutan
PM Modi launches RuPay card in Bhutan
MSMEs will play important role in job creation, says Union Minister Gadkari
MSMEs will play important role in job creation, says Union Minister Gadkari
Madhya Pradesh: 11 lose sight after eye operation in Indore
Madhya Pradesh: 11 lose sight after eye operation in Indore
We are now hopeful of getting justice : Pehlu Khan family members on Raj govt forming SIT
We are now hopeful of getting justice : Pehlu Khan family members on Raj govt forming SIT
Rajnath Singh remark on no first use  policy irresponsible and unfortunate: Pakistan
Rajnath Singh remark on no first use policy irresponsible and unfortunate: Pakistan
CM Sarbananda Sonowal inaugurates Assam's first CNG station
CM Sarbananda Sonowal inaugurates Assam's first CNG station