In 2024, the Indian market will bid farewell to the investment fund Omidyar Network and the American company WeWork Inc., while the bookmaker Parimatch continues to face restrictions on investing in the country.
According to TWN’s report in India, the mentioned corporations are aligning with industry leaders like Disney, General Motors, Vodafone Group, and BYD, who have previously encountered challenges in the Indian market. Notably, Parimatch, a renowned betting firm, has also encountered obstacles while strategizing investments in the Indian economy.
Omidyar Network wants to stop investing
The announcement of Omidyar Network‘s decision to halt all new investments in the Indian economy by 2024 was so unexpected. The company has already put in more than $600 million into different local startups like e-pharmacy 1MG, edtech Vedantu, and fintech startups Kaleidofin, Kiwi, M2P Fintech, and Indifi. Pierre Omidyar, the founder of Ebay and a supporter of the foundation, did not give any reason for the move, citing only “significant changes in the context and economic landscape.”
According to certain reports, Omidyar Network and other Western corporations face restrictions on their investments in India. Parimatch, similarly, encounters challenges in conducting business in India. Due to the unfavorable local environment, Parimatch has been compelled to delay its investments in the country.
Indian startups’ capital lost
The departure of Omidyar Network coincided with a notable decline in financial support for Indian startups. In the year 2023, funding experienced a 62% decrease, amounting to approximately Rs 66,908 crore, in contrast to the Rs 180,000 crore received in 2022. These figures represent the lowest funding levels since 2018, when Indian startups managed to secure Rs 1,00,930 crore in investments.
WeWork Inc. is leaving India
In April 2024, WeWork Inc. made public its intention to completely withdraw from India, divesting its entire 27% ownership in the local division through a secondary transaction. Despite reporting a revenue of Rs 1300 crore in the 2023 fiscal year, the company filed for bankruptcy. Prospective purchasers of the shares include the Enam family group, the investment firm A91 Partners, and Mithun Sacheti, the founder of CaratLane.
High taxes for the gambling business
India implemented a 28% GST on online gambling, casinos, and horse racing in October of the previous year. This tax led to Super Group and Bet365 exiting the market. Gambling companies have taken legal action against the government in an attempt to lower the tax rate to 18%. Ravindra Shinde, CEO of Dyutabhumi Hotel and Resorts, argues that the tax rate is disproportionately high compared to other countries. Parimatch contends that the business environment in India is not conducive for foreign companies to thrive, making it extremely challenging to operate in this region. By the way, the bookmaker never entered the market and even encountered counterfeit versions of its brand.
Chinese investors face problems
India poses challenges not just for Western corporations, but also for Chinese ones. For instance, it turned down a $1 billion plant construction proposal from BYD, a Chinese electric car maker. In December 2023, India’s Law Enforcement Authority arrested three high-ranking executives of the Chinese mobile company Vivo on allegations of money laundering.
Causes of investment difficulties
The matter is that India has strengthened its control over Chinese enterprises as a component of its geopolitical approach, trying to protect its national interests. The nation aims to assume a leading role in the American ‘Indo-Pacific strategy’ to curb China’s progress, thereby imposing further obstacles for international investors. Consequently, numerous companies, such as Parimatch, encounter challenges when attempting to make investments in India.
