The Walmart-Flipkart deal needs to be thoroughly examined. The concerns expressed by various forums shouldn’t be ignored just because a foreign company is investing in what is really an Indian e-commerce success story. The FDI rules permit it, but there are major reasons to worry about letting in a behemoth of a commerce enabler whose links to China’s cheap goods will lead to flooding of what are just alternatives to existing goods made in India. This will come at a huge cost to the negative balance of trade with China, that has already hugely affected even the gigantic US economy. The mom-and-pop store may survive the Walmart storm, but millions will be out of jobs soon as the workforce shrinks from Walmart’s scale of operations.
The bar on multi-brand retail FDI may have queered the pitch for huge foreign big box retailers like Walmart, who are now seeking the unbridled route into India via e-commerce. The fear only multiplies on what effect this will have on 50 million small traders and 40 million SMEs, who have already been hit by the predatory pricing of e-commerce giants like Amazon and Flipkart dominating the Indian market. Experts have noted that the trade deficit with China last year was around $54 billion, and that the outflow over the past decade has been around $350 billion. This may escalate if Walmart comes into the picture as it sources about 80 per cent of its merchandise from China. In an ideal world, open competition may be good for the consumer, who pays cheaper prices, but it could come at the cost of destroying the lives of fellow Indians in a shrinking job market which has little space for the millions of new jobs needed every year for society as a whole.
There’s no denying Walmart has shown seriousness in investing for the Indian market in terms of cold chains, warehousing, liaising with kirana stores and sourcing for its global operations. However, as long as a minimum percentage of backend purchase of Indian goods is not guaranteed in its e-commerce operations, the giant’s presence in a faceoff with Amazon will only act to the detriment of India’s trade deficit with China. It’s no secret that in a country free of trade unions and minimum wages and acceptable working conditions, the Chinese state is in effect a major partner that subsidises exports. Chinese toys, fireworks, lighting and light fittings have pushed their Indian counterparts towards extinction. If India goes the Walmart way in multi-brand retail too, China will benefit even more in jobs and sale of goods, with big profits going to Walmart’s American shareholders and India becoming the loser once again.. It’s time for policymakers to put on their thinking caps and study this Walmart-Alphabet takeover of Flipkart.
