Flipkart and Amazon India are predicted to go through higher losses due to the fall in sales and hike in compliance costs after the updated FDI policy for online market, according to reports from Morgan Stanley. While Amazon may suffer double the loss in three years, Walmart could go through a loss of $280 million from Flipkart.
This comes just as Amazon was able to curb losses in its international unit, where India contributes significantly, from a little over $3 billion in 2017 to $2.1 billion in 2018. But a note by Morgan Stanley MD Brian Nowak, reviewed by TOI, said new regulations could lead Amazon to a wider long-term loss.
“We are paying attention to the long-term impacts of this law (new FDI clarifications) which, in our view, is likely to lead to increased Amazon India investment and larger losses from restructuring its business operations … We would also expect this to lead to higher long-term competition as this law should make it easier for other India-based companies to build and compete in e-commerce,” it added, predicting Amazon’s international business losses could swell to around $4 billion in the next three years.