They fear Walmart will slowly dominate the Indian market, finish competition and start dictating its own terms on pricing.
Even as the traders and shopkeepers continue with their countrywide protests against the $16-billion Flipkart-Walmart deal, the Confederation of All India Traders (CAIT) is going to hold a national convention from 23 to 25 July in Delhi to discuss their future action plan.
Speaking to The Sunday Guardian, CAIT general secretary Praveen Khandelwal said, “We are protesting against the deal mainly because it is against the norms of foreign direct investment (FDI) in our country. If Walmart enters the Indian market, it will control and manipulate the retail trade in India through the e-commerce route which will be a death knell for the sector.”
The deal wherein the US retail behemoth has acquired 77% share in Flipkart while the rest will be distributed among the shareholders of the Indian e-commerce giant, has created a intense debate in the country with market experts standing divided on the issue.
Khandelwal said that the deal will enable Walmart to source consumer items globally.
“It will dump its products in our country and our retail market will be flooded with those products through e-commerce route. It will create an uneven level playing field and subsequently a non-competitive market.”
He opined that Walmart will, at a later stage, dominate the sector in this country and dictate its own terms on matters like price regime. He demanded an immediate scraping of the deal as “this does not stand good for the Indian economy”.
However, co-founder of mobile application “share bazaar” Dipendu Nandi differed on this count. He held that the deal has created a lot of opportunities for the Indian e-commerce as the sector has evolved into a massive $15-billion market in 2017.
“One of the good things about the deal is that Walmart will be competing with Amazon, which is the sole king in the Indian market as of now. This will definitely bring in a lot of foreign investment into India and help expand the e-commerce market,” Nandi explained but admitted that the deal will have an impact on the domestic suppliers as Walmart will dominate the market on its own accord.
On Khandelwal’s opinion that the deal goes against the FDI policy, Nandi disagreed and stated that it nowhere breaks the FDI norms. “According to our FDI policy, you can create a market place but you can’t come out with your own stock. That is what Walmart is doing, hence there is no violation of the FDI policy,” he added.
When contacted, Walmart sought to clarify that the “deal is very much in line with Indian government’s FDI policy” and said that the acquisition will pump up the manufacturing sector in India. Flipkart, however, refused to comment on the whole gamut, when approached.
While so much is being said about the deal, the local shopkeepers here have a different point of view. Aditya Garg, owner of a shop in Chandani Chowk, said the Flipkart-Walmart deal “won’t hurt them”. “It’s not going to affect the established shops like us that have been working in the market for decades. Hence, Walmart coming to India is not a matter of concern for us,” Garg asserted.
He also said that traders are getting uncomfortable as Walmart has a “huge internal capacity”. “But I don’t think the deal is going to affect the small-time traders. People will always prefer branded products, especially when it comes to online market. The traders are getting uncomfortable because Walmart has its own outsourcing,” he added.
Khandelwal, on the other hand, questioned the wisdom behind going in for the deal. Stating that the deal will be “beneficial only to Flipkart”, he advised the protagonists to see the reasons behind an offline retailer (Walmart) entering a platform which is not its core competence.
The traders want the deal scraped and have also written to Competition Commission of India (CCI) on the issue. “We are waiting for the government’s reply on this,” said Khandelwal. When this correspondent tried to reach the CCI officials, none of them was available to comment.
Meanwhile, Reliance Industries (RIL) Chairman and Managing Director Mukesh Ambani on Thursday said that his company saw its biggest growth opportunity “in creating a hybrid, online-to-offline new commerce platform”. Market experts are seeing this as an open challenge to Amazon and Flipkart-Walmart duo.