Walmart Says It Was Prepared For Changes In Policy When It Bought Flipkart
When you invest in India, be prepared that rules are going to change, says Walmart.
As new rules make it difficult for foreign-owned online retailers to hold inventory or sell private labels in India, Walmart Inc. said it was prepared for regulatory turbulence in the country when it took over the nation’s largest e-commerce company Flipkart.
“When you make investment in India, things are going to change,” Brett Biggs, vice president and chief financial officer of the Bentonville, Arkansas-based retail giant, said during a conference call with an institutional investor. Biggs said that’s what he learnt from his association with the joint venture with Bharti Retail that ended in 2013.
“They did the first time we were in India and they will again, we know that,” he said, referring to changes in FDI policy earlier. “We knew that going into an investment and you’ve just got to work their way through.”
Flipkart and rival Amazon faced a setback in December when India tweaked foreign direct investment rules for e-commerce marketplaces. The changes starting February barred online retailers from holding inventory, selling products of companies they have stake in, and capped purchase by sellers from the wholesale arms of the e-commerce company. The new rules also clamped down on exclusive tie-ups, deep discounts and selling private labels.
While Walmart said it’s “disappointed” to have a law that changes quickly, it remains bullish on India in the long term. “Don’t feel any differently than about it just six months ago,” Biggs said.