Economic Challenger Issue 80 July -Sept 2018 | Page 6

Flipkart to create a complementary online –
offline business to take brands to smallest
towns and cities.
India's organized retail business in the
offline space is still underpenetrated. Here
govt. allows only 51% FDI to multi-brand
retail in a partnership with a local player,
while the single-brand retail is allowed
100% FDI. Walmart has been successful in
availing prevailing laws of the land and
breaking the deadlock for many other
players. Walmart will have to tie up with an
offline retailer in India because of
regulatory provisions as Amazon did by
buying a stake in Shopper’s Stop. There are
limited listed players in offline space in
India and some of them may go for such a
tie-up in a medium term. India's domestic
organized retail industry is estimated to
double next two years to about $ 115 billion
in 2020. Flipkart is expected to make losses
until 2020 because it has been valued high
at 2.8 times of EV to gross merchandise.
Walmart is likely to step up its sourcing from
India for its global operations as Flipkart
has a huge supplier base. So far Walmart's
sourcing from India has remained very
limited in apparel, generic medicines and
handicrafts from Indian suppliers like
Welspun and Dr. Reddy's for its stores in US,
UK, Canada and South Africa.
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Economic Challenger// ISSN 0975-1351/ Issue 80, July - September 2018