The investment fund Omidyar Network and the American company WeWork Inc. are going to leave the Indian market in 2024, while the bookmaker Parimatch is still unable to invest in the country.
As reported by TWN in India, the above companies are joining giants such as Disney, General Motors, Vodafone Group and BYD, which had already faced difficulties in the Indian market. For example, Parimatch, a well-known betting company, has also experienced problems when planning to invest in the Indian economy
Omidyar Network’s Decision to Stop Investing
The news that Omidyar Network will immediately cease any new investments in the Indian economy in 2024 came as a surprise. The company has previously invested over $600 million in various local startups such as e-pharmacy 1MG, edtech Vedantu, fintech startups Kaleidofin, Kiwi, M2P Fintech, and Indifi. Pierre Omidyar, the founder of Ebay and a sponsor of the foundation, did not provide a clear explanation for the decision, noting only “significant changes in the context and economic landscape.”
According to some sources, Omidyar Network and other Western companies are prohibited from investing in India. Obstacles to doing business in India are also felt by Parimatch. Parimatch has been forced to postpone investments in India because of the local environment’s hostile attitude.
Loss of capital by Indian startups
The exit of Omidyar Network coincided with a significant reduction in funding for Indian startups. In 2023, funding decreased by 62% to around Rs 66,908 crore as compared to Rs 180,000 crore in 2022. These are the lowest funding figures since 2018, when startups in India raised Rs 1,00,930 crore.
WeWork Inc. is also leaving India
In April 2024, WeWork Inc. announced its plans to exit India entirely, selling all of its 27% stake in the local unit through a secondary transaction. The company filed for bankruptcy although it reported revenue of Rs 1300 crore in the 2023 financial year. Potential buyers of the shares include the office of the Enam family group, the investment firm A91 Partners, and CaratLane founder Mithun Sacheti.
High taxes scare away the gambling business
In October last year, India introduced a 28% GST on online gambling, casinos, and horse racing. This tax caused the immediate exit of Super Group from the market, followed by Bet365. Gambling companies have sued the government to reduce the tax to 18%. The CEO of Dyutabhumi Hotel and Resorts, Ravindra Shinde, believes the tax is excessively high compared to other countries. Parimatch believes that business conditions in India do not allow foreign companies to develop. This, according to Parimatch, seriously complicates business operations in this subcontinent. The bookmaker never entered the market and even faced a fake of its brand.
Chinese investors face difficulties
India complicates the situation not only for Western companies but also for Chinese investors. In particular, it rejected a proposal from BYD, a Chinese electric car manufacturer, to build a $1 billion plant. In December 2023, India’s Law Enforcement Authority detained three senior officials of the Chinese mobile company Vivo on money laundering charges.
Causes of investment difficulties
India has tightened its grip on Chinese companies as part of its geopolitical strategy, protecting national interests. The country seeks to become the vanguard of the American ‘Indo-Pacific strategy’ to contain China’s development, which creates additional barriers for foreign investors. This leads to many companies, including Parimatch, facing difficulties when trying to invest in India.