SJM writes to PM that deals like Walmart buying Flipkart to kill Indian market
New Delhi: Swadeshi Jagram Manch (SJM) the affiliate organisation of Rashtriya Swayamsevak Sangh (RSS) has written a letter to the prime minister Narendra Modi that global retail giant Walmart is entering the Indian market from the back door by buying stake in Flipkart. The SJM writes to the PM that it is not in the interest of the country and such deals are killing the Indian market.
The world's biggest retail deal will impact the whole segment including competitors and consumers. Convenor of SJM Ashwini Mahajan said that this deal was unethical and against the market sentiment. FDI is not allowed in e-commerce so it is being brought from the back door. It is being argued that it is a platform and how could market be sold. The letter is with One India that says the SJM, RSS and the Bharatiya Janata Party have a broad consensus that FDI in multi-brand retail will not only kill entrepreneurship but it is anti-farmers and will kill job creation opportunities in the market and rightly this is kept out. But strangely, Walmart is using the e-commerce route to circumvent the rules to attack Indian market. It is to be noted that nowhere in the world, Walmart has a market place model.
Mahajan said that with such deals tax evasion is happening. Interesting thing is that deal happened in Singapore, it was announced in Banguluru however it was approved in Delhi. Not a single penny will come to India because when shares will be transferred the money will go there only. "We are loosing our market as it is the national property of any country which should be in the hands of our own people but it is being sold," added Mahajan.
Mahajan said that Flipcart has always been saying that it was a start up and will sell the company to a foreign entity and go away. However Walmart is the seventh largest economic entity of the world exporting from China. Now, they will sell all Chinese products in the country. But what will happen to the Make In India Initiative of the government.
The companies reached a final agreement and it was decided that Flipkart will be sold to America's Walmart. SoftBank CEO Masayoshi Son, whose firm owns a 20 per cent stake in Flipkart. Softbank is Flipkart's largest investor. SoftBank's 20 per cent stake in Flipkart is worth about $4 billion in the deal. Son had bought this stake for $2.5 billion.
SJM is apprehensive about working of Walmart, which is a $500 billion US behemoth that has a reputation of killing small businesses with ultra-low prices. They fear that Walmart might bring in its own private labels via Flipkart to the Indian consumers, adding to competitive pressures. Walmart has been trying for years to enter Indian market but has remained confined to a 'cash-and-carry' wholesale business amid tough restrictions on foreign investment. It currently operates 21 such stores in India.