Slowly but surely, the opposition to the $16 billion Walmart-Flipkart deal seems to be gathering steam in India.
Earlier this week, around 30 associations representing small traders in various Indian states met in Ahmedabad, Gujarat, to discuss the implications of the US retail giant’s acquisition of the Indian e-commerce firm.
“We discussed what precautionary measures we can take to ensure that Walmart doesn’t enter offline trade,” AM Vikkiramaraja, president of the Tamil Nadu Vanigar Sangakalin Peramaippu, a trade association from the southern Indian state, told Quartz.
The trader associations, representing millions of Indian small businesses, have decided to hold a three-day conference in New Delhi starting July 23 to mark their opposition, according to Vikkiramaraja. Several ministers from the Narendra Modi government will be invited to the event.
“All trade bodies will be reaching out to the central ministries and we will make sure that we have our way,” said Vikkiramaraja, whose association represents over 2.1 million Tamil Nadu traders.
Already, the Confederation of All India Traders (CAIT), representing over 70 million small traders, has filed an anti-trust petition with the Competition Commission of India (CCI) over the Walmart-Flipkart deal. Several other trade bodies have reportedly planned a nation-wide strike against it on July 02.
Fear of getting swamped
India’s small traders believe Walmart has a “hidden agenda“ in acquiring Flipkart. While the American behemoth has failed to gain a foothold in the country over the last decade—India does not allow foreign direct investment in multi-brand retail—with this acquisition, it could now open stores, they say.
This will allegedly force millions of small-time players out of business.
“New York is one of America’s biggest cities, but the local government there didn’t give Walmart the permission to open stores there because small businesses will be affected. When that’s the case, if a country like India, which depends on its around 21,000 crore traders and farmers, allows the company to enter, the livelihoods of these people will be in question,” Vikkiramaraja said. Indeed, despite strenuous efforts, Walmart has not managed to get permission to open stores in New York City.
The American firm’s entry into India will roil the business ecosystem, according to Vikkiramaraja, especially given its huge logistical network and deep pockets.
“Walmart, with its global sourcing network, storage infrastructure, and access to capital, will be able to bring down costs of consumer goods in India, and in the process, affect revenues of small traders…They also escape the ups and downs in the retail business,” he said.
Already at it
The traders allege that Walmart has been inching its way into offline retail for nearly a year now and will soon have control over sensitive data on consumer preferences, manufacturing capabilities of Indian suppliers/producers, quantum of goods of different categories sold in different states, etc.
“The advantage of this is that they will have the opportunity directly to deal with the producers, growers, or manufacturers and work with them,” Vikkiramaraja said. Most Indian traders lack the wherewithal to access such granular data, leaving them at a disadvantage.
Industry observers, however, believe the traders’ concerns are misplaced and based on an incorrect interpretation of Walmart’s plans. “I have spoken to the Walmart representative multiple times and they speak about the shared-value concept they have and how they’re investing in mom-and-pop-stores,” said Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research. “What the traders association do is they go on hearsay rather than facts. The fact is that (Walmart) plans to use mom-and-pop stores as part of their plans.”
Update: In a statement, a Walmart spokesperson said:
We believe that the sentiment among the kiranas in India is positive, as well as encouraging for us. Apart from helping them grow their business through industry best practices, we’ve been helping them during the GST transition as well. Our business with them continues to grow at a healthy rate, which means their businesses are growing, too. And we look forward to working with them more closely in the near future.
As a company that has worked in India for many years, Walmart has established strong partnerships with several stakeholders here.