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India-Flipkart-Walmart
Reuters/Abhishek N. Chinnappa
Facing opposition.
NOT ALLOWED

A group of 70 million small Indian traders is fighting the Walmart-Flipkart deal

By Suneera Tandon

India’s small traders are taking serious steps to stall the $16 billion buyout of Indian e-commerce major Flipkart by the world’s largest retailer Walmart.

On May 28, the Confederation of All India Traders (CAIT), representing over 70 million of India’s small traders, said it had filed an anti-trust petition with the Competition Commission of India (CCI) objecting to the takeover.

In its appeal, CAIT has cited concerns that the acquisition “will create unfair competition and uneven playing field,” it said in a statement released on Monday (May 28). CAIT has also expressed the fear of “predatory pricing, deep discounts, and loss funding.”

The petition comes at a time when the world’s biggest e-commerce deal is awaiting regulatory clearances in India, including one from the CCI. On May 19, Walmart and Flipkart wrote to the CCI allaying concerns that the deal will kill competition in India.

While the deal bodes well for India’s fledgeling e-commerce sector, offline retailers fear they may be overpowered by the might of Walmart combined with Flipkart’s business model. ”Flipkart is a combination of predation, exclusive tie-ups, and of preferential sellers where even online vendors face discriminatory conditions. There will be a denial of market access to non-preferred sellers coupled with the complete annihilation of small-time traders on offline platform,” CAIT said.

Traders are also apprehensive that the deal will open India’s doors to Walmart’s products. “Walmart, arguably the world’s largest retailer in the market, would sell its inventory on the platform of Flipkart, either directly or through a web of associated preferred sellers,” CAIT added. This, it said, would lead to an increase in Walmart’s market share forcing small offline retailers to exit or to sell online on Flipkart.

To be sure, India allows foreign companies to invest in e-commerce marketplaces. However, the country does not let foreign companies open wholly-owned physical stores in multi-brand retail. As a result, Walmart only runs a wholesale business where 100% foreign direct investment (FDI) is allowed. By buying Flipkart, the giant from Arkansas is looking to get a bigger chunk of India’s $670 billion retail market, 2% of which is e-commerce.

Walmart declined to comment on the query relating to CAIT. However, the company maintained that it has been helping million-plus members, most of them small Kiranas, become efficient, modern and profitable through its current wholesale business.

This isn’t the first time there has been opposition to Walmart’s Flipkart investment. In the days following the announcement, trader bodies and nationalist groups publicly opposed it. On May 10, the Swadeshi Jagran Manch (SJM), an affiliate of the Hindu nationalist association, Rashtriya Swayamsevak Sangh (RSS), took to the streets of New Delhi to protest Walmart’s investment. The RSS is the ideological parent of the ruling Bharatiya Janata Party government in India (BJP).

Last week, the All India Online Vendors Association (AIOVA), which represents 3,000 online sellers, approached the CCI alleging that Flipkart gives preferential treatment to a few sellers. And now, CAIT is seeking to protect the interests of small offline traders.