Traders fear Walmart's indirect FDI in retail entry as Binny Bansal exits

Associations say global retail giant will call the shots; to meet Union ministers

Traders’ bodies fear Walmart might go for an indirect foreign direct investment (FDI) in its retail entry to India with the exit of Binny Bansal, its remaining ‘Indian’ co-founder of the country’s largest e-commerce platform Flipkart.

The associations, including the Confederation of All India Traders (CAIT) and the Swadeshi Jagran Manch (SJM), are planning to take up the matter with Union commerce minister Suresh Prabhu and Union finance minister Arun Jaitley. They claim Flipkart would now be effectively controlled by the retail giant, which owns 7 7 per cent of the firm.

“They would be the one calling the shots. This shows that they are getting ready to indirectly enter the retail space in India. Walmart always wanted the total control of the Flipkart and now they have got it. They earlier claimed that the founder is Indian so the company is technically Indian. Now that logic also falls flat. We will meet the commerce minister and the finance minister over the issue,” said Praveen Khandelwal, secretary general of CAIT.

The SJM said the government should not have allowed Walmart to buy a stake in Flipkart as just having an Indian face does not make the company Indian.

“It was unfortunate on the part of the government to consider this deal in the first place. It was simply going against its own policy of not allowing FDI in retail. We will meet the Competition Commission of India (CCI) and ask it why did it give the deal the go-ahead,” said Ashwani Mahajan, co-convener of the SJM.

These two organisations have been against the Walmart-Flipkart deal ever since it was announced. CAIT on Thursday wrote another letter to the commerce minister asking him to bring out an e-commerce policy and constitute an authority to ensure that companies don’t flout rules.

Despite initial optimism of bringing out the e-commerce policy within six months, the government was forced to go back to the drawing board early this year.

The proposed policy was criticised by traders’ bodies and consumers for being heavily tilted towards major firms such as Ola, MakeMyTrip, and Paytm, among others, rather than consumers and small businesses.

As of November, the Department of Industrial Policy and Promotion (DIPP) is yet to begin a new set of stakeholder discussions that were earlier announced. “The general elections are round the corner and the final policy may be out only after formation of the new government,” a senior DIPP official said. This was corroborated by officials from ministries such as electronics and information technology, and consumer affairs and finance, who had earlier raised concerns with certain clauses of the proposed policy.

As a result of multiple ministries arguing against the proposal and the Prime Minister’s Office overseeing the deliberations, a new standing committee of secretaries held its first meeting last month. “The new committee will meet every month but the date of the next meet has not been decided,” the DIPP official said.