ETtech Morning briefing: SoftBank India expectations, Flipkart-Walmart board, E-commerce tax & more

1. SoftBank will overshoot its expectations in India

What's the news?

SoftBank will “overachieve” on it’s commitment to invest $10 billion in 10 years "much ahead of time and at much bigger scale” than it anticipated, as the Japanese telecom and Internet major has already invested over $7 billion in India in the last four years, according to chairman and CEO Masayoshi Son.

The company, which is the world’s most influential technology investor with a $100 billion backing household names including Flipkart and Ola here, also sees opportunities for Indian portfolio company Oyo to go overseas and become a global leader while bringing its global portfolio companies here.

What's the plan in India?

Besides taking ideas and companies from India overseas, SoftBank also sees a big opportunity for its portfolio companies here.

“But the reverse is happening as well. We have invested in 34 companies in the Vision Fund in the last one year since we started and I think 10 of those companies will come to India,” said Rajeev Misra, CEO of the Vision Fund who also sits on the SoftBank board.

The companies may set up joint ventures in India and the list includes German online car dealer Auto1 and Katerra, a technology-driven offsite construction company. Read more.

2. Walmart may get 4 seats on Flipkart board

What's the news?

Walmart, which is in the midst of protracted negotiations for a significant stake in Flipkart, will likely gain about three to four seats on the ten-member board of India’s largest online retailer that will continue to be run as an independent company if the deal goes through, said three people aware of the discussions.

The troika of cofounders Binny Bansal and Sachin Bansal along with chief executive officer Kalyan Krishnamurthy will remain in their current posts as the country’s most valuable startup targets a potential public offer in the future.

What about Amazon's chances at acquiring Flipkart?

Meanwhile, a potential offer from rival Amazon to invest in Flipkart, which is also in the fray, is yet to come through, sources said, even as discussions with Walmart head into the final lap.

Japan’s SoftBank, which owns over 20% stake in Flipkart, is said to be in favour of an offer from Amazon but other investors are wary as they believe that such a deal could run into trouble with competition regulators.

With Walmart expected to invest over $12 billion into Flipkart, some of the industry insiders ET spoke to were of the view that the Bentonville-headquartered conglomerate would look to control finance and legal matters at the entity. Read more.

3. Concerns crop over storing payments data locally

What's the news?

Leading Indo-US business advocacy groups have raised concerns with authorities over the Reserve Bank of India’s directive asking payment companies to store data locally.

Why the concern?

While arguing that restricting data flowing across borders would risk a country’s global competitiveness and economic growth, they said such a move would also not necessarily ensure data protection. The directive could hurt India’s software export market, said Jay Gullish, a senior director of the US-India Business Council (USIBC).

“There is also the risk of a backlash from its (India’s) IT export markets, which could result in reciprocal changes that could undermine India as the preferred outsourcing destination,” he said.

The lobby group is working with its member companies and policymakers to find a solution that will achieve intended regulatory objectives without limiting the movement of data, Gullish told ET. Read more.

4. Tax issues crop up again for e-commerce

What's the news?

India Inc, in particular e-commerce platforms such as Amazon and Flipkart, may need to prepare for withholding tax provisions in two months under the goods and services tax (GST).

The tax deducted at source (TDS) and tax collected at source (TCS) provisions had been put on hold following petitions by the industry that this would increase the compliance burden.

What's the path ahead?

With the GST regime stabilising, these provisions may be imposed from July 1, said a senior government official. The TDS provision mandates that notified entities have to deduct up to 1% state GST and 1% central GST on intrastate supplies of over 2.5 lakh.

In the case of interstate supplies of over Rs 2.5 lakh, TDS will be 2% integrated GST. These provisions are aimed at checking tax evasion as TDS/TCS will leave a trail of transactions.

In the case of e-commerce companies, it means that when they make payments to suppliers for goods sold on their platforms, they have to collect 1% tax and deposit this with the government. Read more.