Walmart-Flipkart deal turns political, lobby groups allege flouting of FDI norms

Amid acquisition talks between Walmart and Flipkart, opposition from political corridors has already started brewing against the deal. They allege the deal is against FDI norms.

The Swadesh Jagaran Manch (SJM), an affiliate of the Rashtriya Swayamsevak Sangh (RSS), and other trade lobby groups have raised the concerns.

The SJM’s national co-convenor Ashwani Mahajan said that the deal is in violation of Indian laws, as FDI in ecommerce is not allowed.

He alleged that companies such as Flipkart and Amazon were circumventing FDI rules by operating the marketplace model. He also believed that the foreign entities will also kill competition and flush small retailers.

However, this is not the first time, when any lobby group in India has alleged Flipkart for flouting FDI rules.

Last month, Retailers Association of India (RIA) raised the issue of FDI rules violations by the e-tailers.

In a complaint to Commerce Minister Suresh Prabhu, the association alleged that these marketplace models have been operating against the spirit of the policy. It further added that these firm have been influencing prices on their platforms and illegally offers abnormal discounts.

Besides, All India Online Vendors’ Association (AIOVA), a group of 3500 online sellers, is another grudging party which has not been kept in loop of any communication between Flipkart and Walmart. They are unsure what would be their future on the platform.

In March last year, the government announced to introduce 100 per cent FDI in online retail of goods and services under the so-called “marketplace model” through the automatic route, seeking to legitimize existing businesses of e-commerce companies operating in India.

At that time, department of industrial policy and promotion (DIPP) explained that the marketplace model is an information technology platform run by an e-commerce entity on a digital and electronic network to act as a facilitator between buyer and seller.

DIPP had prohibited FDI in e-commerce companies that own inventories of goods and services and sell directly to consumers using online platforms.

The development was first reported by TOI.