Brett Biggs, CFO at Walmart, said the company expected ‘legislation changes’ and it will have to steer its way through this change
US retail giant Walmart was not surprised by the new foreign direct investment (FDI) norms introduced by the government in December last year. Brett Biggs, Chief Financial Officer at Walmart, said the company expected 'legislation changes' and it will have to steer its way through this change.
"When you make an investment in India, things are going to change. They did the first time we were in India and they will again, we know that. We knew that going into an investment and you have to work your way through. And so, we are going to have real changes," Biggs said in a conference call on March 5.
Walmart acquired homegrown e-commerce giant Flipkart for $16 billion in 2018. Biggs said India is an important market for Walmart and a long-term opportunity. "It is disappointing that you have a law like that changed quickly, but we have made the adjustments and are moving forward," he added.
The government brought into effect new rules for e-commerce marketplace models with FDI. These norms came into effect on February 1, under which e-commerce firms can exercise little control over the vendors on their platforms. It also puts a cap on discounts and cashback offers on the websites. Firms can no longer sell brands on their platforms where they have equity relations.
Because of these rules, e-commerce majors Amazon and Walmart through Flipkart had to restructure their business models.
During an earnings call, C Douglas McMillon, President and CEO of Walmart, said the size of the Indian market and low penetration of e-commerce in the country makes it important for the company.
"In future, we hope to work with the government for pro-growth policies that can allow this nascent industry and the domestic manufacturers, farmers, and suppliers that benefit from it to develop and prosper. In terms of the regulatory environment, we were disappointed in a recent change in law and the lack of consultation but the team has worked to ensure we are in compliance with the new rules," he added.
