India set to topple China as Flipkart-owner Walmart's biggest market outside US

Walmart | Representative image.

India will this year topple China as Walmart’s biggest market outside the United States, according to a top executive of the American retail major that owns Flipkart and PhonePe.

“In India, we have Flipkart and PhonePe. I was in India just last year to meet with those teams and understand what they're doing, and both really are exciting opportunities. Both have large portions of market share there,” said Walmart chief financial officer John David Rainey in an investor call earlier this week.

“I believe India is going to be the largest market in the world this year, surpassing China. It's a really promising opportunity in the future,” he added.

Flipkart’s contribution margin is positive and continues to expand, top Walmart executives said in a previous call last month. They also said that the Indian e-commerce marketplace is benefitting from investments in infrastructure made in the last three years and riding on India’s strong economic prospects.

One of the highlights of Walmart in the quarter ending January (Q4) was that its international business saw operating income drop 72 percent in constant currency terms to $300 million, primarily due to the re-organisation of Flipkart and PhonePe as separate businesses.

Moneycontrol had reported earlier that PhonePe’s shareholders had to cough up $1 billion in taxes as the firm decided to domicile in India from Singapore, after being hived off from Flipkart.

Walmart International chief Judith McKenna pointed out during the earnings call that PhonePe was only a 4-month-old business with total payments value (TPV) in the tens of millions of dollars when the US retail major first invested in Flipkart.

As of the December quarter, PhonePe’s annualised TPV had crossed $950 billion and the number of monthly transactions had topped 4 billion.

Meanwhile, at a time when tech companies are cutting costs to increase their profitability, e-commerce major Flipkart has decided to restrict annual increment of salaries to only 70 percent of its employees, which means that around 5,000 of its senior staff won’t get any hikes this year.

It was communicated to employees through an email on February 22 that those who are at Grade 10 and above levels won't get any hikes. However, bonus payouts and employee stock option allotments are on track as planned for the employees of the Walmart-owned company, according to a person aware of the developments.

While the company’s annual appraisals have been completed, the increments are due to kick in from April 1.