“In India and in many emerging markets, things can be volatile. There are regulation changes and today, we are dealing with Covid-19 in India just as we are in other markets,” president and CEO Doug McMillon said at the company’s annual shareholders’ meeting.
Walmart on Thursday said that while it is excited with the progress of Flipkart and PhonePe, things can turn “volatile” in India and other emerging markets, underlining the regulatory uncertainties.
“In India and in many emerging markets, things can be volatile. There are regulation changes and today, we are dealing with Covid-19 in India just as we are in other markets,” president and CEO Doug McMillon said at the company’s annual shareholders’ meeting. “And so, the team is doing a nice job of being flexible, responding to the environment that they are operating in,” McMillon said.
The CEO’s comments come close on the heels of the Department for Promotion of Industry and Internal Trade (DPIIT) rejecting Flipkart’s proposal to undertake a food retail business in India. Rival Amazon already operates in the space through subsidiary Amazon Retail India (ARIPL). Earlier this week, Flipkart said it intends to re-apply for obtaining a licence and is evaluating DPIIT’s response.
Walmart acquired a controlling stake in Flipkart in 2018 for a $16 billion. Together with Amazon, the companies command close to 80% market share in the country’s e-commerce sector and have made large investments to consolidate their presence.
Faced with protests from small businesses, India has tweaked the foreign direct investment (FDI) norms in e-commerce and is also devising an e-commerce policy with an intent to create a level playing field between online and offline retailers.
The government is in the process of releasing the draft e-commerce policy in the public domain for seeking comments, officials said last week. In February 2019, the government had notified a new draft e-commerce policy that provided for regulating cross-border data flows and setting up storage facilities locally. The draft policy sought to disallow sensitive data collected and processed locally but stored abroad from being shared with any third party, even with the consent of the consumer.
The revised FDI norms that came into effect last year barred online firms having foreign investment, like Flipkart and Amazon, from selling products of entities in which they hold stake or whose inventory they control.
E-commerce firms in India faced the heat of the pandemic as companies were barred from selling non-essential items —a major sales driver — since the imposition of the lockdown starting March 25. Relaxations were permitted partially only in early May and firms resumed full operations later in the month.