Why did CAIT and others oppose Walmart-Flipkart deal?

The Walmart-Flipkart deal of $16 billion is much more than just two retails merging together. Its impact will be seen beyond the e-commerce spectrum, across markets. Now will this ‘impact’ be good or bad is debatable.

(Courtesy: Money Control)

For years, we have been told that Walmart’s entry into Indian retail would be bad. The traders and other market players were manipulated by the political class. Aside from Walmart’s own reluctance to enter Indian market due to red tape culture, this was the major reason why we never saw even one of its iconic stores here.

So, it was quite obvious that the Confederation of All India Traders (CAIT), along with few organizations and unions, had an objection to the Walmart-Flipkart deal. No doubt, Walmart will bring very high competition in the Indian market with its ungodly amount of resource. And it in the short-run, it will adversely affect the retailers, traders, and middlemen.

However, there are also plenty of other benefits that Walmart-Flipkart deal with bring-

• The end consumers will be benefited highly with cheaper products.

• The producers of goods and raw items (like farmers and manufacturers) will be benefited greatly; because they would be able to sell their production at the right price to Walmart, if the retail brand does decide to enter Indian market wholeheartedly.

(The Business Journal)

So, fearing the high competition level that Walmart can bring in the market – which might even force those on the marginal line to wind up – CAIT was opposing Walmart-Flipkartdeal. Indeed, right now, what are the exact terms of this deal is not yet disclosed. Will Walmart start selling on Flipkart, will it launch its brick-mortar store in India—nothing is confirmed.

So, the fear on traders’ end is uncalled for. Plus, you cannot tell a private company to do something. CCI has already given a stamp of approval on the deal. Yes, the partnership will cause disruption in the short-run. But once the wheels are on run, the benefits will far outweigh all the disadvantages.

I empathize with CAIT. But I would also contest their fears and claims.