CAIT, RSS-affiliated outfits seek govt intervention in Walmart deal

Retailers on Wednesday termed Walmart’s majority stake acquisition of Flipkart as a ‘backdoor entry’ into India’s retail trade and demanded the Centre bring a policy to regulate online trade. Farmers’ organisations said Walmart expanding its footprint in the sector might benefit some but would harm small and marginal farmers.

Confederation of All India Traders (CAIT), a traders’ lobby group, as well as outfits affiliated to Rashtriya Swayamsevak Sangh (RSS) sought Prime Minister Narendra Modi’s intervention, and said they might hit the streets if their concerns were not addressed.

Bharatiya Kisan Sangh, a farmers’ organisation affiliated to the RSS, and Sangh-affiliated economic think tank Swadeshi Jagran Manch (SJM) said Walmart’s entry isn’t bad news just for retailers but also for farmers.

Walmart has been sourcing vegetables from India for its wholesale operations since the last few years. Walmart buys from Punjab, Uttar Pradesh and southern states, and might look to expand its footprint in other states of the country as well after its acquisition of Flipkart.

“The deal offers a good opportunity for Walmart to enter the food retailing in India. Current policy permits up to 100 per cent FDI under the government approval route for retail trading (including through e-commerce) in food products manufactured and produced in India,” Atul Dua, partner, Advaita Legal, said.

Other experts warned it might not always be a good idea to allow one player dominate the food landscape. They said such a development could be to detrimental for small farmers.

Also, how far farmers would benefit from the deal as and when Walmart decides to expand its sourcing depends on India’s notoriously rigid rules governing wholesale markets, they said.

“This deal might be beneficial for farmers in the long run, but it must also be remembered that having such a big player in the rather unorganised market of vegetables in India might not be a good proposition for small and marginal farmers,” Sukhpal Singh, chairperson, Centre for Management in Agriculture at IIM-Ahmedabad, told Business Standard. Singh said rules like bank guarantees demanded by some APMCs from big retailers to directly purchase from farmers could also act as deterrents.

SJM and CAIT demanded the Centre should immediately frame a national policy for e-commerce. CAIT said the Centre should put in place a regulatory authority for e-commerce, and until such time, the deal should be put in abeyance and closely scrutinised. The Kisan Sangh doubted claims that Walmart’s entry would benefit farmers were not supported by facts.

“We have heard such claims for several years now. But the opening of several online platforms and malls hasn’t benefited farmers or rid the farm sector of middlemen. On the contrary, there has been a push by these big companies to maximise their profits at the cost of farmers’ incomes,” Kisan Sangh general secretary Badri Narayan Chaudhary said.

SJM convener Arun Ojha said if such claims were true farmers in the US wouldn’t have been complaining. “We have written to the PM, but are also prepared to take our fight to the streets,” he said.

CAIT said Walmart’s entry will ‘vitiate’ e-commerce and retail market. It said said Walmart-Flipkart deal was a ‘clear attempt’ by Walmart to control and dominate India’s retail trade in the long run by way of backdoor entry into e-commerce to reach out to offline retail market of India.

CAIT’s Praveen Khandelwal said it would be difficult for the government to control and regulate foreign owned online platforms, and indigenous players will be unable to compete if a foreign company runs the platform. He said the absence of any e-commerce policy will make it impossible to regulate predatory pricing and deep discounts. “Only venture capitalists, investors and promoters will be benefit, and not the country,” he said.

SJM asked the PM to ensure that the interests of those at the bottom of the pyramid in retail and agriculture space are guarded. 

SJM’s co-convener Ashwani Mahajan also dispatched a copy of the letter to Commerce Minister Suresh Prabhu.

The experience of other countries is that their domestic companies were sold out to bigger MNCs, and all over the world giants like Walmart and Cosco have taken over, Mahajan said.

It will further kill the 'Make in India' dream too, Mahajan said. Mahajan alleged that Flipkart's operations are "not beyond suspicion" and that its group companies have not filed their statement of accounts for the years 2016-2017 and 2015-2016 and have only made partial disclosures.