Flipkart gets additional $62.8 Mn investment from Tencent amid India-China volatility

Tencent Holdings Ltd, the Chinese tech conglomerate, has invested USD 62.8 million in Indian E-Commerce giant Flipkart through its Singapore based parent company Flipkart Pte. Reports state that the capital infusion by Tencent is a part of the USD 1.2 billion raised by Walmart-owned Flipkart in July 2020.

Walmart, the American retail giant, remains the largest stakeholder in Flipkart with 81.87% controlling stake, while Tencent which increased its stakes from 5% to 5.34%, remains the second-largest stakeholder.

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India-China volatility

This additional investment by Tencent comes amid the volatile relations between India and China over a series of fierce border conflicts between the armies of the two nations. After the violent faceoff on June 15 in the Galwan valley that led to the martyrdom of 20 Indian soldiers including a commanding rank officer, the Indian Government had banned 59 Chinese made apps or apps having any links with China, keeping in mind the data security of Indian citizens and as a means to make India self-reliant.

The first app ban was followed by another 47 apps which were clones of the previously banned apps. WeChat, a popular messaging app by Tencent was also among the list of apps banned by the government. Thereafter, the Indian government banned another 118 apps including the popular gaming app PUBG in September after the recent flare-up on the Southern bank of Pangong Tso lake in Ladakh.

Apart from the apps ban, Indian Government also took countermeasures and amended the FDI policy to keep a check on the investments made by border nations in Indian firms and start-up companies. Due to the amendments, any entities from border countries cannot invest in Indian companies via automatic route and will have to pass through the scrutiny of the Indian government.

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Investment via bypass route

Tencent seems to have chosen to bypass the Indian government by going via Singapore. The Chinese tech conglomerate has also made investments recently in India's popular music podcast streaming app Gaana which was done through its European subsidiary Tencent Cloud. Tencent's other investments in India include bookkeeping platform Khatabook and Pratilipi.

Flipkart with the help of the new round of capital is gearing up for its upcoming festive season which is one of the important business periods in the eCommerce space. The lineup of festivals such as Navratri, Durga Puja and Diwali is said to be the prime period of business. The company is now waiting for the year's Big Billion Day sale which usually lasts for four to five days starting around October's festive season and ending with Diwali.