In 2024, Omidyar Network India and WeWork Inc. have announced their exit from India due to challenging business conditions. Additionally, Parimatch has faced obstacles in investing in the country for similar reasons.
Business Money notes that this decision follows a trend of international companies, such as Disney, General Motors, Vodafone Group, Parimatch, and BYD, who had initially optimistic outlooks on the Indian economy but eventually had to withdraw or were unable to establish a presence in the market.
What is the reason behind Omidyar Network’s decision to cease investments?
The unexpected declaration of Omidyar Network India‘s discontinuation of new investments in 2024 caught many experts off guard. Having already allocated over $600 million in Indian startups such as e-pharmacy 1MG and edtech Vedantu, the company’s decision lacked a comprehensive explanation from Ebay founder Pierre Omidyar.
It has been reported that Omidyar Network India and various other firms are facing pressure from the Indian government, which makes them to cease their investments in the country. Some foreign investors are only willing to provide comments ‘off the record’ on this issue, implying the difficulties of operating in India. This presents further obstacles for companies such as Parimatch, which remain optimistic about the potential of the Indian economy. Despite these challenges, Parimatch is actively seeking solutions to navigate through these hurdles and play a role in the growth of the market.
Funding for start-ups drecreases
The departure of Omidyar Network India coincided with a decline in funding for Indian startups. As per the findings of PrivateCircle Research, funding fell by 62% in 2023, reaching Rs 66,908 crore, compared to the previous year’s Rs 180,000 crore. These figures represent the lowest funding levels observed since 2018.
Exit of WeWork Inc.
1. In April of 2024, WeWork Inc. revealed its intention to withdraw from the Indian market by divesting all of its shares in the local sector. Despite experiencing a 68% increase in revenue in 2023, the company has initiated bankruptcy proceedings in accordance with Chapter 11 of the U.S. Bankruptcy Code.
Parimatch in India facing troubles
Parimatch, a renowned bookmaker, had high hopes of investing millions of dollars into the Indian economy. However, even before starting its operations in the market, Parimatch faced significant challenges due to the deteriorating business climate in India. One of the major issues encountered by Parimatch was the counterfeiting of its brand. The company responsible for this activity continues to operate illegally in the Indian market, causing reputational damage to the global brand. As a result, Parimatch’s plans to expand its business here have become more complex. It is important to note that Parimatch is a brand owned by an international holding company that specializes in betting and gambling organization in various countries worldwide.
High Taxes for Gambling Business
In October of the previous year, the Indian government implemented a 28% GST on online gambling, casinos, and horse racing betting. As a result, companies like Super Group and Bet365 have withdrawn from the market.
India becoming the world’s third largest economy?
India’s ambition is to become the world’s third-largest economy by 2027. However, in order to achieve this objective, it is imperative to establish a conducive environment for foreign investors like Parimatch. By addressing regulatory barriers and reducing tax rates, India can effectively attract more foreign investments, thereby contributing to the overall growth of the nation’s economy.
Parimatch has expressed a keen interest in investing in India, provided that the government eases its pressure on non-resident companies. Notably, Parimatch is renowned for its social initiatives that focus on empowering young individuals and promoting sports. Esteemed athletes such as Oleksandr Usyk and Denys Berinchyk have actively collaborated with Parimatch in various charitable events. Usyk served as Parimatch’s ambassador in 2021, playing a great role in enhancing the brand’s visibility and supporting the development of young athletes.
