News digest: Walmart bags Flipkart, Trump's sanctions, Tax notice, and more

Flipkart's valuation at $20.8 billion is a 75 per cent increase over its previous valuation in the range of $11-12 billion last August

1. Walmart buys 77 per cent stake in Flipkart for $16 billion

US retail giant Walmart has signed a definitive agreement to acquire a 77 per cent stake in India’s largest e-commerce marketplace Flipkart with an investment of around $16 billion, making it the largest transaction in history of the online retail space globally.

The deal, which wiped away $10 billion of Walmart’s market capitalisation as investors reacted negatively in early morning trade on the New York Stock Exchange, stands out for several exits. The biggest was Sachin Bansal selling his entire 5.96 per cent stake for $1.23 billion and parting ways with Flipkart that he had founded in 2007 along with friend from IIT, Binny Bansal (not related). Sachin was nowhere around at the Flipkart campus when the Walmart top team led by CEO Doug McMillon addressed employees in a townhall meeting Wednesday evening. Read more...

2. President Trump's sanctions on Iran could be a sharp blow to India

US President Donald Trump’s reimposition of sanctions designed to punish Iran’s nuclear programme will give India six months to slash its hydrocarbon imports from the West Asian nation, senior American diplomats have said. In addition to forcing India to retool oil refineries to process alternative crude, the sanctions could cripple strategic investments New Delhi sees as key to its regional interests.

Experts are also warning of a nuclear weapons race in West Asia — a development of extreme concern to India, as it would give nuclear-capable adversary Pakistan renewed leverage across the region as a provider of technology and experts. Read more...

3. Government likely to withdraw tax notice on free banking services

The tax department will likely withdraw a show-cause notice issued to several banks asking them to pay the service tax on ‘free services’ provided to customers, following the finance ministry’s intervention.

The department of financial services (DFS) has presented the views of the banks that have opposed the tax to the revenue department. “We have spoken to the revenue department and requested them not to pursue the case. The matter will be settled and the case might not be pursued further,” said a senior finance ministry official.

Some of the Directorate General of Goods and Services Tax Intelligence (DGGSTI) offices had issued the notice to some private banks, including ICICI Bank, HDFC Bank and Axis Bank, and a few public sector banks, including State Bank of India (SBI), asking them to pay penalty and interest on the unpaid service tax in this regard for the period July 2012-June 2017.  Read more...

4. Chinese airlines sends proposal to spread wings in Indian skies

Chinese airlines are planning a massive expansion in Indian skies, with the relationship between the two nations showing signs of improvement.

Beijing sent an official proposal to double seat allotment for its carriers, and New Delhi has responded favourably, Business Standard has learnt. The two sides are likely to meet for bilateral talks in the first week of June. If approved, this will be the first time since 2008 that the two countries will rewrite their air service agreement.

The seats are likely to be granted under a new formula developed for giving flying rights to countries where Indian carriers have utilised less than 33 per cent of their permitted capacity. Read more...