Flipkart's acquisition a blow to 'Make in India' campaign: CPI-M

Walmart store. Credit Diego M. Radzinschi ALM

Walmart store. Credit Diego M. Radzinschi ALM

Walmart's $16-billion acquisition of a 77% stake in India's largest online marketplace is the world's biggest e-commerce deal.

"As of now, SoftBank has not exited Flipkart".

On the other side, Flipkart too would benefit from Walmart's know-how and expertise in retail infrastructure management, marketing, supply chain and logistics, it added.

The All India Online Vendors Association (AIOVA) too expressed its reservation over the probability of Walmart bringing in its own private labels via Flipkart to Indian consumers at hyper-competitive prices, which will cannibalise the market and make it hard for other sellers to operate.

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On 9th May 2018, the market witnessed the closure of one of the major acquisition deals as Walmart bought a majority stake of 77 percent in Flipkart.

Since the profit is made from shares that were held for more than two years, it would attract a long-term capital gains tax of 20 per cent plus surcharge and education cess, effectively wiping away a fourth of the profit.

The CPI-M said it was common knowledge that Walmart sourced its products from worldwide 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.

Kalyan Krishnamurthy said that Flipkart's focus on making its sellers succeed will continue with the same vigour as in recent years.

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"The situation is still very fluid". On Wednesday, all significant shareholders in Flipkart like Naspers, venture fund Accel Partners and eBay had confirmed they were selling their shares to Walmart. Double Taxation Avoidance Agreement (DTAA) is a tax treaty that India has signed with many countries to help taxpayers avoid paying taxes on the same income, both in the country where it is earned as well as the country of residence.

"Since the deal has a greater ramification on India's retail trade, a closer scrutiny is certainly warranted".

SoftBank may hold the Flipkart stake for 6-12 months with a view to avoid the short-term taxation problem, the report added.

Walmart's buyout of Flipkart is expected to close by the year-end, the United States retailer had said in a statement.

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Walmart CEO Doug McMillon, in a town hall meeting on Thursday, reportedly told Flipkart employees that Steuart Walton, the grandson of Walmart founder Sam Walton, Judith McKenna, the president at Walmart International, and Dirk Van den Berghe, regional CEO of Walmart Canada and Asia, will join the Indian firm's Board.

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