India needs to open its markets for more foreign investments to spruce up competition, quality of goods and services and increase tax revenue, Walmart Chief Executive Officer Dough McMillon said.
Speaking at the Hindustan Times Leadership Summit on Thursday, McMillon said it will still be a while before Walmart opens its signature front-end stores in India.
India’s stringent foreign investment rules to preserve the interests of local businesses have prevented overseas firms from expanding in India. The company acquired Flipkart for $16 billion in 2018.
Talking about foreign investment mandates in India, McMillon said India will continue to grow but for that, it must open its markets.
“Well, rules change everywhere. You know, we operate in all these countries; so it’s not unfamiliar to us that government policies would change. Our big bet is that India is going to grow and India wants competition because they want market dynamics, they want consumers to be able to save money, they want higher-quality merchandise, they want taxes paid; if you want all those things, then you should be for investment and for competition, and some money will come from within India, and some money should come from outside India for India to fulfil its potential. So, that’s it; that’s our long-term bet," McMillon is quoted as saying by Mint.
The US retailer announced earlier this week that it aims to triple its exports from India to $10 billion in the coming seven years. Earlier this year, Amazon founder Jeff Bezos made a similar export commitment to India.
Walmart, a majority stakeholder in Flipkart, competes with homegrown Reliance’s JioMart and Amazon in India’s crowded and highly-competitive ecommerce market. India is also one of the retailer’s top sourcing markets.
It was reported recently that the company wants to take Flipkart public on a US exchange to raise $10 billion, making it the biggest listing of an Indian company on a foreign exchange.
The retail market in India has strengthened and the Covid-19 pandemic has given it the digital push, as lockdowns prompted people to shop online for their needs.
McMillon is optimistic about its business in India despite the tough competition. “Part of what’s exciting in India is that it’s a remarkably competitive environment, ecommerce only accounts for about 4 per cent of total retail in India, and there are a number of companies competing in the market, including Amazon, Reliance, Snapdeal, Paytm and many others. We think this is a good thing. The competition will improve services, bring down costs for consumers, and give additional value to producers. Customers in India today are getting high-quality goods at affordable prices from companies like Flipkart, Reliance and Amazon," he said.
McMillon added that Walmart’s investment in Flipkart and PhonePe helped the company “do what they wanted to do” without worrying about raising money.
“Our role has been to give them (Flipkart and PhonePe) those resources and open up the rest of Walmart for them to take any IP that they want to take, but they make those decisions... it’s a very local business in that way, just with some money from us. It’s been great to watch their growth, and we’re really pleased so far," McMillon said.
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