Despite Flipkart assuring sellers that there will be no operational changes post the Walmart-Flipkart deal, the Confederation of All India Traders (CAIT) continues to oppose the deal and is moving Competition Commission of India (CCI) to file its objections regarding the deal.
CAIT also wrote to Union Commerce Minister Suresh Prabhu seeking to know what steps the Government has taken to scrutinise the deal and check if it is violating any law or FDI policy of the government.
Ever since the deal entered its final stages, seller associations have been raising their voices against the deal claiming that it not only violates FDI laws in the country but will also lead to an uneven level-playing field for domestic sellers, affecting their sales.
In a statement, CAIT Secretary General Praveen Khandelwal said that important issues such as FDI policy, cyber security, apprehension of using ecommerce for entering into retail trade by circumventing the law come into play with respect to the deal and that given the stiff opposition from trade bodies and online vendors, the government must take notice and scrutinise the deal in depth of it.
“The Walmart Flipkart deal will prove to be a nightmare for retail trade and the economy of the country. There will be enormous job losses and an uneven level playing field will be created with such deals. It is highly regretted that so far Government has not taken any step to consult the traders despite lodging their objections with the Commerce Ministry. Such an attitude indicates the turning balance towards MNCs at the cost of ignoring the domestic retail trade,” he said.
Praveen further points out that interest rates for financial lending in US, Europe and other countries are as less as 1.5-2.5% while in India its around 12-20% per annum. This difference in interest rates in itself, he says, is enough to kill the domestic trade.
“The government should take steps to bridge the gap to maintain equal level playing field and to encourage healthy business practices in the country,” he added.
Earlier, The All India Online Vendors Association (AIOVA) too expressed its reservation with the deal. It feared that Walmart might bring in its own private labels via Flipkart to Indian consumers at hyper-competitive prices, which will cannibalise the market and make it difficult for domestic sellers to operate.
Walmart acquired 77% stake in Flipkart earlier this month for $16 billion. Walmart’s investment includes $2 billion of new equity funding. Walmart and Flipkart are also in discussions with additional potential investors who may join the round.
Post the deal announcement, Flipkart wrote to sellers, assuring them that they will continue to benefit and that Flipkart’s focus on making sellers succeed will continue with the same vigour as in recent years.
“As you know, Flipkart has constantly optimised operations and passed on the benefits resulting from such efficiencies to sellers, this, empowering them to deliver an even more fulfilling experience to customers. With Walmart on board, we are committed to doing more of the same,” Flipkart CEO Binny Bansal wrote.