In 2024, investment fund Omidyar Network India and American coworking giant WeWork Inc. announced their exit from the Indian market. This move reflects a broader pattern of international firms like Disney, General Motors, Vodafone Group, and BYD, which initially had high hopes for India’s economy but were eventually forced to withdraw or never succeeded in entering the market.
For instance, renowned bookmaker Parimatch planned to invest millions in India. However, despite not yet operating locally, it is already facing significant challenges due to the country’s complex business environment. Parimatch is a brand owned by an international holding company that operates betting and online gambling businesses worldwide.
Why Is Omidyar Network Leaving?
The announcement that Omidyar Network India would immediately cease new investments in 2024 took many by surprise. The fund has already invested over $600 million in local startups, including e-pharmacy platforms like 1MG, edtech company Vedantu, and fintech startups Kaleidofin, Kiwi, M2P Fintech, and Indif. However, Ebay founder Pierre Omidyar, who supports the fund, has not provided a clear explanation for the decision.
He described the move as a response to “significant changes in the context and the growing economic landscape” experienced since their first investment in 2010. The vague reasoning left even many team members in India uninformed, who were planning to hire more staff and invest further before the announcement.
Some reports claim that since 2021, Omidyar Network India, along with a dozen other American, Australian, and European firms, was barred from investing due to alleged illegal sources of capital. Meanwhile, companies like Parimatch, despite believing in India’s economic potential, struggle to grow their businesses for unclear reasons.
A Quiet Market Shift
News of these developments is rarely publicized, but many believe that in recent years Indian authorities have systematically pressured foreign companies out, favoring domestic firms instead.
Parimatch, in particular, is caught in this policy of “import substitution.” The company’s investment plans were undermined by the appearance of a counterfeit brand operating illegally in India, which damages the reputation of the genuine international Parimatch brand.
Foreign investors tend to speak on these issues only “off the record.” One lamented: “You can make money here; you can spend money here, but you can never take what you’ve earned home.”
Startup Funding Declines Sharply
Omidyar Network India’s exit coincides with a broader decline in startup funding. Market data from PrivateCircle Research shows funding dropped by over 62% in 2023 to ₹66,908 crore, down from ₹180,000 crore in 2022. This represents the lowest level of funding since 2018, when startups raised ₹1,00,930 crore, according to the Indian publication Business Standard.
Americans Exit Coworking Spaces in India
In April 2024, WeWork Inc. shocked the market by announcing its full exit from India, planning to sell its 27% stake in the local unit. Founded in 2017 by the Embassy Group developer, WeWork will reduce its founder’s ownership from 73% to 60%. Despite a 68% revenue increase to ₹1,300 crore in 2023 and an 80% reduction in net losses, the company filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code and is awaiting approval from India’s Competition Commission for the share sale.
Potential buyers include the Enam Group’s family office, investment firm A91 Partners, and CaratLane founder Mithun Sacheti, signaling further government efforts to “clean” the market for Indian investors.
High Taxes Drive Gambling Companies Away
Last October, the Indian government imposed a 28% Goods and Services Tax (GST) on online gambling, casinos, and horse race betting. This prompted operators like Super Group and Bet365 to exit. Gambling companies have since filed lawsuits seeking to reduce the tax to 18%, with a Supreme Court hearing held in April 2024, though no relief has been granted yet.
Ravindra Shinde, CEO of Dyutabhumi Hotel and Resorts, notes this tax rate is excessively high compared to jurisdictions like Singapore and Macau, discouraging international gambling operators from investing in India.
India’s Ambition to Become the World’s Third-Largest Economy
India aspires to become the world’s third-largest economy by 2027. Achieving this requires fostering a business environment that welcomes foreign investment rather than promoting monopolies of domestic firms and driving away companies like Disney, General Motors, Parimatch, and Vodafone Group.
Parimatch is actively involved in charitable initiatives supporting youth education and sports development. World champions Oleksandr Usyk and Denys Berinchyk have participated in Parimatch campaigns, with Usyk serving as the brand ambassador in 2021 to boost visibility and encourage young athletes.
