US retail giant Walmart on Tuesday defended its move to acquire Flipkart, saying it is in line with the government’s FDI policy, amid protests by traders against the deal. The acquisition will boost manufacturing in India by providing thousands of local suppliers access to consumers through the marketplace model, the company said in a statement.
The Confederation of All India Traders (CAIT), a body of traders, organised mass protests in different parts of the country against the Walmart-Flipkart deal. CAIT has been demanding the government to scrap the deal and constitute a regulatory authority to regulate and monitor the country’s e-commerce market.
“This partnership (with Flipkart) will support SME suppliers, farmers in the country to get access to the market through this platform and boost local manufacturing in India,” Walmart said in a statement. The company further said, “we believe the combined capabilities of Flipkart and Walmart will create India’s leading e-commerce platform. This will benefit India by providing quality, affordable goods for customers while creating new skilled jobs and fresh opportunities for small suppliers, farmers, and women entrepreneurs.”
CAIT Secretary General Praveen Khandelwal, however, strongly objected to the merger of two companies alleging that Walmart, which is the world’s largest retailer, will create an “unfair competition and uneven level playing field” and “will indulge in predatory pricing, deep discounts and loss funding”.
The trader’s body said it apprehends that the deal is bound to circumvent established laws and FDI policy of the government. It said if the issue is not addressed immediately, traders will decide on the future course of action in CAIT’s National Convention to be held in Delhi from July 23-25.
Walmart, however, said its continued efforts have been to support domestic manufacturing in India by sourcing locally from SME suppliers, small farmers and women-owned businesses.
“A clear testament of that is showcased in our merchandise 95 per cent of which come from within the country,” Walmart said. India is one of the important countries from where it sources a significantly large volume of products including handicraft, textile, apparel, pharmaceuticals etc., hence giving a boost to local manufacturing and exports, the company added.
“In line with government’s FDI policy allowing 100 per cent FDI under automatic route in marketplace e-commerce model, our partnership with Flipkart will provide thousands of local suppliers and manufacturers access to consumers through the marketplace model,” Walmart said.
The company further said it will continue to focus on agri supply chain investment to help rural farms generate more income particularly for small farmers mainly due to improvement in farming techniques, increased access to markets and less food waste in the value chain from farm to fork.
Supporting Walmart, Internet and Mobile Association of India President Subho Ray said the FDI rules for marketplace model of e-commerce were made after due consultation with all stakeholders. Walmart does not seem to have violated any existing FDI rules for investment in e-marketplaces, he added.
The commerce and industry ministry notifies FDI policies through press notes. Press Note 3, which was released in 2016, enlists guidelines for foreign direct investment in the e-commerce sector. It also articulated that no discounting is allowed and that no inventory ownership directly or indirectly is allowed by e-commerce marketplaces.