The American company WeWork Inc. and the investment fund Omidyar Network will exit the Indian market in 2024, and the bookmaker Parimatch will not invest there.
The aforementioned businesses are joining industry titans like Disney, General Motors, Vodafone Group, and BYD, which have already encountered challenges in the Indian market, according to TWN in India. For instance, the well-known betting company Parimatch has run into issues when attempting to make investments in the Indian economy.
Decision of Omidyar Network to give up investing
It was unexpected to learn that Omidyar Network would stop making any new investments in the Indian economy in 2024. The business has already invested more than $600 million in a number of regional startups, including Indifi, Kiwi, M2P Fintech, e-pharmacy 1MG, and edtech Vedantu. The decision was made without giving a detailed explanation. Pierre Omidyar, the founder of Ebay and a foundation supporter, only mentioned “significant changes in the context and economic landscape.”
Some sources claim that Omidyar Network and other Western businesses are not allowed to make investments in India. At the same time, Parimatch experiences difficulties in conducting business in India as well. The negative attitude of the local environment in India has forced Parimatch to delay investments.
Loss of capital by Indian startups
Indian startups experienced a decline in capital due to the departure of Omidyar Network. In 2023, funding dropped by 62%, amounting to approximately Rs 66,908 crore, in contrast to the previous year’s Rs 180,000 crore. 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 also leaving India
In April 2024, WeWork Inc. made the decision to withdraw from the Indian market completely. As part of this move, the company is selling its entire 27% stake in the local unit through a secondary transaction. Despite reporting revenue of Rs 1300 crore in the 2023 financial year, WeWork Inc. filed for bankruptcy. Several potential buyers, such as the office of the Enam family group, investment firm A91 Partners, and CaratLane founder Mithun Sacheti, are interested in acquiring the shares.
The gambling industry is deterred by exorbitant tax rates.
Last year in October, India implemented a 28% GST on online gambling, casinos, and horse racing, resulting in the immediate departure of Super Group from the industry, followed by Bet365. In an attempt to alleviate the burden, gambling companies have taken legal action against the government, seeking a reduction of the tax to 18%. Ravindra Shinde, CEO of Dyutabhumi Hotel and Resorts, strongly believes that this tax is too high when compared to other countries. On the other hand, Parimatch argues that the business environment in India is not conducive for foreign companies to thrive. According to Parimatch, this situation significantly complicates their operations in the subcontinent. Furthermore, the bookmaker has never entered the Indian market and has even encountered instances of counterfeit branding.
Chinese investors face difficulties
India poses challenges not just for Western corporations, but also for Chinese financiers. Specifically, it dismissed a $1 billion plant construction plan put forth by BYD, a Chinese electric vehicle producer. In December 2023, India’s Law Enforcement Authority apprehended three high-ranking executives from the Chinese mobile company Vivo on allegations of money laundering.
Causes of investment difficulties
India has strengthened its control over Chinese companies as a component of its geopolitical approach, safeguarding its national interests. The country 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.
