On May 10, Walmart had announced the acquisition of 77% stake in Flipkart for about 16 billion USD marking the largest e-commerce deal so far in the history of e-commerce. In India, 100% foreign direct investment (FDI) is allowed in e-commerce for marketplaces.
Since Walmart Flipkart deal, the battle for nullification is going on with as many as 127 groups coming together to oppose the Walmart-Flipkart deal. The networks like National Fish-workers Forum and National Hawker Federation are also signatories to the opposition. Previously, the deal was opposed by Confederation of All India Traders (CAIT) and All India Online Vendors Association (AIOVA) that moved the Competition Commission of India (CCI) against the 16 billion USD deal.
The deal is opposed as by the Indian traders as Walmart has a history of wiping out small shops by dumping cheapest goods from all around the world and cutting all the competition in the host country. With Indian government policies allowing only 50% FDI in multiband retail Walmart has been kept at the bay from the Indian retail market and was operating in Indian wholesale market only where a 100% FDI is allowed. But, high consumer demand and great business opportunity with policy allowing 100% FDI in e-commerce sector has fascinated Walmart once again and hence the Flipkart buyout eventuated.
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With global behemoths like Walmart and Amazon wrestling for as big a share of the Indian e-commerce marker as possible, a group of over 100 trader organisations on June 4 showed their concerns about the survival of small traders in such a scenario.
The trader’s organizations implied that the Walmart-Flipkart deal will cause “irreversible damage to small traders and endanger the jobs of thousands”. Associations such as the Centre of Indian Trade Unions (CITU) and the All India Kisan Sabha (AIKS) called for the nullification of biggest e-commerce deal in the history. The arguments were centred on the expected duopoly of the US-based companies Amazon and Walmart in the Indian retail market.
Members from the traders’ organization exemplified China, which has patronized domestically owned digital e-commerce systems like Alibaba. Members of association also highlighted that many countries constrain foreign takeover deals that are considered strategic connivance by digital companies.
“Walmart is well-known for its global supply chain, especially of cheap goods from China, which will hurt local manufacturers and suppliers,” Chamber of Associations of Maharashtra Industry and Trade (CAMIT) President Mohan Gurnani stated. He also added that the worst affected will be small brick and mortar retail stores along with SMEs and suppliers of goods including farmers.
The idea of trade associations is that this is similar to what would happen with FDI in brick-and-mortar multi-brand retail. The traders are against digital based retailing which becomes omnipresent and omnipotent and this concentration of economic power with the two US MNCs, i.e. Amazon and Walmart can constitute a potential duopoly in India. The trade unions are also concerned that this duopoly will render them too powerful to be meaningfully regulated. They cited the examples of the USA where trail of destruction of small stores, local businesses, small manufacturers and countless workers left behind by Walmart and other giant retailers is well documented, and the EU has also witnessed the same. ‘New retail’ seeks to own and control key data of all trading activity across sectors resulting in unassailable power. National policy or regulatory remits over them would then be as ineffective as they currently are over Google or Facebook.
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Another concern that is distressing is the members of the panel are the alleged data control by the e-commerce companies like Amazon and Walmart. These companies are implied to seek and to own and control key data of consumers and warned against misuse of such data in today’s digitally-empowered society. The biggest cause of concern is impossibility to check the compliance of norms by these giant corporations as they operate from abroad and store all their data overseas.
The members claim that Walmart’s acquisition of Flipkart threaten India’s economic and digital sovereignty and the livelihood of millions in India. If the Walmart-Flipkart deal goes through, two US companies namely Amazon and Walmart will dominate India’s e-retail sector. They will also own India’s key consumer and other economic data, making them our digital overlords.
They claim that Digitalisation will soon be central to a wide range of economic activities, many of these being controlled by MNCs. A sovereign nation must be able to regulate e-commerce companies, making them comply with policies that uphold public interest, and ensuring that all economic actors get their fair share. The sovereignty and integrity of data will be lost to these data lords with giant corporations operating from abroad and storing all their data overseas. There is an urgent need to reverse the entry of foreign e-commerce companies and their take-over of Indian entities, and to evolve effective regulations to govern the operations of domestic entities and protect the interests of the different players involved.
Further, according to The Economic Times, the Indian ecommerce think tank, headed by commerce minister Suresh Prabhu, think tank on the Framework for National Policy on E-commerce will seek to collectively calculate the challenges that are confronting India in the arena of digital economy. The think tank will try to developing recommendations for a widespread national policy on e-commerce .They are expected to form a policy in next six months.
Walmart India Chief Corporate Affairs Officer Rajneesh Kumar said the company is committed to India for the long term and maintained that the company have been running Cash and Carry business in India for almost a decade and are helping small kiranas succeed and modernize. He affirmed that the company is sourcing more than 95% merchandise from within the country only which includes from thousands of small farmers, small suppliers and women-owned businesses.
Responding to the allegations that the deal will end up in a complete ciaos by destroying jobs and small retailers Rajneesh Kumar said the transaction will lead to creation of lakhs of new jobs and help thousands of local suppliers and manufacturers access the consumers through Flipkart’s marketplace model.
Contrarily Walmart claimed that it is planning to amass Walmart’s kirana store program called Mera Kirana that helps small family-owned grocery stores modernize. He also added that Walmart is also opening fulfilment centers to expand its cash-and-carry footprint across the country.