World’s largest retailer Walmart Inc has tried to assuage concerns around its US $16 billion takeover of Flipkart, saying the deal is good for the country as it will help create millions of jobs over time and help the economy through local sourcing of goods by the company.
According to a PTI report: Walmart Chief Executive Doug McMillon played down not being able to meet either Prime Minister Narendra Modi or any senior minister after announcing the world’s biggest e-commerce deal, saying he has had meetings with officials in the past and would have them in future as well.
He saw “no trouble” in getting regulatory approval needed from the Competition Commission of India for the deal to buy 77 percent stake in Flipkart.
“It is pretty clear that this (deal) is good for customers and would create jobs and help society,” he was quoted by PTI as saying.
Asked about ‘icy demeanour’ of the government in him not being able to meet the Prime Minister, and the Commerce Minister Suresh Prabhu’s changing plans at the last moment, he said he did not take the events as cold reception.
“I didn’t really take it that way,” he was quoted by PTI as saying. “We deal with the government at all kinds of levels all the time… we have met before and I am sure will meet again.”
Asked specifically if an appointment with Prime Minister was indeed sought, he said Walmart is not new to the country.
“That (meeting) is not the most important thing. We don’t need a photo-op,” he told PTI.
Soon after the deal was announced on Wednesday, RSS-affiliate Swadeshi Jagran Manch alleged that Walmart was “circumventing” rules for a “back-door entry” into India and sought Prime Minister’s intervention to safeguard “national interest”.
“This will further eliminate small and medium businesses, small shops, and opportunity to create more jobs. Most of these small entrepreneurs are already battling for their existence; entry of Walmart will further create problems for them,” the Co-Convenor of the manch, Ashwani Mahajan said in a letter to the prime minister.
McMillon, however, said he saw no problems in getting support for the deal. “I haven’t had any concern about support and I think this investment is good for the country and people generally realize that.”
On job creation, he said while it is difficult to put a precise estimate to jobs investment in e-commerce space will create, third-party analysis shows that it can generate millions of direct and indirect employment.
“There is an opportunity over a period of years to generate another 10 million jobs. I don’t want to put a timeline but we have analysis to show that,” he was quoted by PTI as saying.
The jobs would be created not just in the company but with the suppliers who sell their products on the Flipkart platform.
He said Walmart buys more than 90 percent of goods locally in every country where it runs stores and e-commerce business.
“We do that because lead times are shorter… it also helps create jobs. So this ecosystem built up around our business helps. Make in India is something exciting to us,” he was quoted by PTI as saying.
He said Flipkart would be run as a board managed company with Walmart acting as a resource centre.
Flipkart Co-Founder Binny Bansal said he saw great synergies in the two companies and the deal would be a “watershed movement for start-up businesses”, helping bring global focus on India.
On taxation, Walmart CEO said the company is working with all of the investors to ensure they are more compliant.
On taking Flipkart outside India, Bansal said India itself presents a very huge opportunity where the company was growing very rapidly.
“So we will continue to focus and stay invested and growing in this market (India) for now. For us the bigger focus is to build around the e-commerce ecosystem that we have built rather than taking Flipkart to newer market,” he was quoted by PTI as saying, adding that startups and e-commerce are to two big engines of growth for the Indian economy.
The company would continue to scout for capability driven acquisitions but hasn’t earmarked a budget for it.