Flipkart’s Acquisition by Walmart: The future of Indian Startup
Walmart Inc. has acquired one of India’s largest E-commerce businesses: Flipkart was taken over by the U.S retail giant Walmart Inc. recently valued at a whopping 16 million dollars, 77% of the stakes in what is being termed as the world’s biggest E-commerce acquisition. Practically the biggest acquisition in the E-commerce domain till date, this is Walmart’s first venture into the E-commerce industry. The remaining stakes are currently held by some of Flipkart’s existing shareholders, including co-founder Binny Bansal, who now owns 4.24% of the total shares after selling off 0.5% of his earlier lot; China’s Tencent Holding ltd., Tiger Global Management LLC, and Microsoft Corp. Sachin Bansal, the co-founder of Flipkart, however, has opted out of the company by selling the whole of his 5.5% stakes to Walmart. What did it mean for Walmart? Walmart expects India to become one of the largest E-commerce markets globally. The acquisition will provide it greater access to India’s market, which Morgan Stanley estimates, has the potential to grow to $200 billion in about a decade from the $30 billion today. Walmart, thus, can now tap the Indian retail market online itself. The immediate impact of this acquisition, however, was of skepticism at Wall Street. Walmart’s share prices fell by 3.7% resulting in approx $4.3 billion loss for the Walton family, according to Bloomberg Index. Moody’s Analyst states that the company cannot be expected to earn profits straight away. It will have to incur losses in the initial few years. What will it change: The deal marked as the biggest E-commerce acquisition till date globally will recalibrate the startup ecosystem in India, shape it for the better, restore faith in proper exits and boost the E-commerce industry. Talking about the Indian startup ecosystem, which was going through a dry phase will see a lot more deals happening this year. The deal had plenty of takeaways for all the stakeholders. The key takeaway for next-gen Entrepreneurs is to inspire themselves from the growth tale of Flipkart seeing young founders building the team, the product, getting global funding, scaling and growing and finally after a lot of sweat getting the biggest exit to a global giant. These stories till now were familiar to US ecosystem. The most important learning can be the resilience and the relentlessness shown by the company and the founders for 10 years and finally making it big. Following the acquisition, we can see a lot more individuals taking up Entrepreneurship and a rise in the number of startups. The Indian startup ecosystem has been persistently scarred by poor exits, lack of IPOs and low returns for investors. This deal will boost the investor’s confidence. With the belief that big doors are possible, more VC capital will flow into the ecosystem, and more angels will penetrate the market. Further, the kind of global attention this deal has already brought to India is unparalleled, and global VCs and Banks will be eyeing India with bigger specs. The last but the most important will be the impact on E-commerce industry in India for all its stakeholders. It is expected that the contribution of the E-commerce industry to GDP will increase from $20 billion at present to around $300 billion by 2030. The number of digital buyers has increased drastically of late. A new study by Forrester Research has stated that approximately one-fifth of the total retail sales will take place online by 2021 in the Asia Pacific region. India is a fast-growing Asian digital market, close to 329.1 million people are expected to buy goods and services online by 2020, which is about 70.7% of the internet users. We will soon be encountering the biggest blood battle between E-commerce behemoths – Alibaba, Amazon, and Walmart on Indian battlefield. The competition will empower the entire industry – Suppliers, Logistic providers, and most importantly the consumers. We are looking forward to exciting times overall and gearing up for the changes we are going to see soon.
File Early; Beat the Rush – Avail the Benefits of Presumptive Taxation Scheme
The Presumptive Taxation Scheme was framed by the Income Tax Authority of India, under section 44AD, 44ADA, and 44AE of the Income Tax Act, 1961 to provide relief to the small tax payers from maintaining books of accounts, and getting their accounts audited. The assessees adopting this scheme are required to file their Income Tax Returns for the Assessment Year 2018-19 on or before 31st July 2018. An assessee adopting the Presumptive Taxation Scheme can declare income at a prescribed rate and thereby claim the relief. In other words, income of the assessee is calculated on presumptive basis rather than on actual basis. This scheme is most likely to benefit small traders, businessmen, and professionals. It cannot be adopted by a non-resident and any person other than an individual, a HUF, a partnership firm (not a Limited Liability Partnership). Furthermore, an assessee who has made any claim towards deductions under section 10A/10AA/10B/10BA or under section 80HH to 80RRB in the relevant year cannot adopt this scheme. Assesses claiming relief under this scheme are subject to the following benefits: No requirement of maintaining books of accounts; 8% of the Gross Receipts or Total Turnover treated as income in case of Business (in case of amounts received by Account Payee cheques/draft through digital transactions, only 6% is treated as income) having turnover less than ₹ 2 crores; 50% of the Gross Receipts to be treated as income in case of professionals having turnover less than ₹ 50 lakhs; ₹7500/- per goods carriage per month ( subject to maximum 10 goods carriages) is deemed as income in case of persons engaged in business of plying, hiring or leasing of goods carriage. Assesses claiming relief under this scheme are subject to the following benefits: Individuals and HUF having total income exceeding ₹ 5 lakhs or claiming any refund in return (excluding Individuals of the age of 80 years or more who are furnishing returns in Form No. ITR-1 or ITR-2) Individual and HUF being a resident other than non-ordinary resident, having any foreign asset/ income or claiming any foreign tax relief Person filing ITR in Form No. 3, 4, 5 or 7 The presumptive taxation scheme is a positive move for the Medium and Small Medium Enterprises (MSMEs) as it has reduced the compliance requirements. However, it is to be noted that once the assessees opt for the Presumptive Taxation Scheme, they are required to follow the same for the next five years. If they fail to do so, then they cannot avail the benefit under the scheme for the next five years. The assessees will be required to keep and maintain books of accounts and shall be liable for tax audit as per section 44AB from the assessment year in which they opt out of the scheme. Therefore, assessees must file their returns at the earliest and not wait till the last hour to do so.
Venturing into an Era of Opportunities: Indo-European Business Forum announces Event 2018
India and European Union are two of the world’s biggest economies, sharing universal values and beliefs. The European Union is India’s largest trading partner. With the objective of making India a world class manufacturing powerhouse, many campaigns (like Make in India, Digital India ) have been undertaken by the Government of India. These campaigns have provided a favourable opportunity to big business investors worldwide to invest in India’s growing economy. The European Union is India’s number one trading partner. Free Trade Agreement Negotiations were launched in the year 2007 to increase bilateral trade and investments between the two. In light of the above, Indo-European Business Forum has been organising events on regular basis to facilitate the exchange of ideas among top corporate, business leaders and eminent personalities from India and Europe. We believe that India can offer strong and sustained business opportunities for European Union countries. Hereby, we take pride in announcing the event 2018 on ‘Invest in New India and strengthening India-European Union partnership and IEBF Excellence Awards, 2018’. The two day event is scheduled to be held on 2nd and 3rd November, 2018 in London, with Dr Joseph Muscat, Prime minister of Malta as the Guest of Honour. The event is also to be graced by the presence of eminent personalities like Rt. Hon. Baroness Sandip Verma, Chairman of European External Affairs Committee and former Minister of Energy and Climate Change and International Development; Mr. Kapil Dev, former Indian cricketer and entrepreneur; Mr. Vijay Sampla, Minister of State for Social Justice and Empowerment; Mr. G.P. Hinduja, Co-Chairman Hinduja Group; Mr. S.P. Lohia, Group Chairman of Indorama Corporation; Mr. Anil Agarwal, Chairman of Vedanta Resources and many politicians, business leaders and professionals both from European Union and India. The complete schedule of the event is as follows: 2nd November, 2018 Event No. 1: Agenda:- ‘Invest in New India and strengthening India-EU Partnership’ Timings:- 3:30 PM to 5:00 PM Venue:- Boothroyd Room, Portcullis House of Parliament, London, UK Event No. 2: Agenda:- ‘IEBF Excellence Awards’ Timings:- 6:30 PM followed by Dinner from 7:30 PM onwards Venue:- House of Lords, Westminster, London, UK 3rd November, 2018 Event No. 1: Agenda:- Startup Incubation Program- Acceler8 Timings:- 3:00 PM to 5:30 PM Venue:- St. James Court, Taj Hotel, Buckingham Gate, Westminster, London SW1E 6AF, UK Event No. 2: Agenda:- Real Estate Exhibition ‘India Cityscape 2018’ Timings:- 6:30 PM to 8:30 PM followed by cocktail dinner from 8:30 onwards Venue:- St. James Court, Taj Hotel, Buckingham Gate, Westminster, London SW1E 6AF, UK The agenda of the summit organized by IEBF strives to focus on the existing trade relations between India and the member countries of the European Union. The bilateral relationship between the two economies spans across various areas including foreign policy, security issues, sustainable development, modernisation, trade, and economics. India is a significant investment destination owing to the economic reforms. It has attracted a lot of foreign investment and moved towards the path of global integration. Foreign Direct Investment inflows have increased by 37% with the launch of the Make in India initiative. There has been a considerable improvement in the infrastructure sector of the country, especially technological infrastructure. Efforts are being made to make India a digital economy. Statistics show that there has been a substantial and steady increase in EU27 trade, i.e., both exports and imports have increased. In fact, trades have more than tripled since 2000. With its young, skilled workforce; high growth rate and deregulation; India is set to become a key destination for foreign investment. Over the years, IEBF has been successfully organising business networking meets, in both London and New Delhi, to bring investors and dignitaries from both the economies on the same platform. Businesses networking meets held in New Delhi, the administrative capital of the country, are a confluence of top brains from the fields of business and finance and serve a good platform for promoting trade co-operation. Similarly, business networking meets held in London have witnessed high powered delegation from both the European Union and India every year, enabling exchange of knowledge, ideas and expertise. London is EU’s most competitive city to do business in, till Brexit of course. The city provides best prospects for business development and innovative thinking and has been adjudged as the most connected place to live in the world. It is home to massive global brands like Morgan Stanley, KPMG, to name a few; leading law firms; global banks and media agencies. These big brands are based in the financial district of Canary Wharf Street , which is the biggest employer of bankers and executives in Europe. Not only will an association with the Indian market give them a new arena to explore, it will also be an enriching experience for the Indian Companies who would get the much needed global exposure. The summit intends to take on the challenge now to sustain the progressive growth and strengthen the economic partnership between the EU and India, thereby tapping into their full potential.
World Bank Data: India becomes World’s Sixth Largest Economy
The world’s largest democracy, India is on the road to gaining economic muscle power. A federal republic with 29 states and 7 union territories, India is a fast growing diverse economy. According to the updated figures released by the World Bank for the year 2017, India is the sixth largest economy of the world. This is a milestone for the Indian economy more so because it has successfully surpassed France, which now holds the seventh position. The US is the world’s highest ranked economy followed by China, Japan, Germany and UK. About a decade ago the GDP of India was half of the GDP of France. However, the size of the Indian economy has nearly doubled since then and is expected to power ahead as a key economic engine. The Gross Domestic Product of India increased by an average of 6.2%, that is an increase of 116.3% from 1.201 trillion dollars in 2007 to 2.597 trillion dollars in 2017. On the other hand, the Gross Domestic Product of France has reduced by 0.01% that is from 2.657 trillion dollars in 2007 to 2.583 trillion dollars in 2017. According to the International Monetary Fund, India is projected to generate a growth of 7.4 % this year and 7.8% in 2019, boosted by household spending and a tax reform. India ranks 123rd in terms of its per capita income at Purchasing Power Parity, amounting to 7060 dollars, while France is ranked 25th with per capita income of 43,720 dollars. The Purchasing Power Parity is the true value of a country’s currency vis-à-vis the dollar. It depicts the true picture of the relative performance of different countries. India has a much lower Purchasing Power Parity as compared to France owing to the difference in the size of its population. The population of India stands at 1.34 billion while that of France is 67 million. This shows that India should have grown at a much faster pace and at a greater scale to level some of the inequality in the levels of per capita income. The Indian economy had a strong rebound after slow down as a result of demonetization. The rural and informal sectors of the economy suffered disproportionately because of the cash crunch as a majority of their work is based on liquid cash. Even today nearly 80% of our population is dependent on the informal sector. Shortage of cash led to meant severe losses in their employment and earnings. However, the economy started to revive and has had a strong rebound since July 2017 but also suffered a huge loss of 1.5% of its GDP growth rate. The manufacturing sector which contributed 17.4% to GDP in the year 2012 increased its share to 18.1% in the year 2018. Significant improvements have also been observed in the service sector whose contribution to GDP increased from 18.9% in the year 2012 to 21.7% in 2018. Union Minister Arun Jaitley said that if firm growth continues, India will soon reach the fifth position in world rankings. The announcement also proved good for the markets as benchmark indexes Sensex and the Nifty jumped 0.8 percent and 0.7 percent respectively, while the rupee surged by 20 paise to end at a one-week high of 68.57 per dollar. India might have surpassed France in terms of its GDP rankings but is way behind it in terms of its per capita income. There is still a long way to go before it establishes itself as a global superpower. Even as it is gaining economic power, India has to utilize its full potential to strengthen its weaker sectors.
