Consumers, Workers, Farmers, Rejoice!

The acquisition means prices of commodities will reduce further due to competition even with improved quality; workers at retail stores will get better employment terms; the state will get more revenue and, finally, if allowed to turn a de facto multi-brand retailer, WalMart will offer better prices to farmers for their crops than what middlemen presently do


For long, consumers have rated online purchases of retail products in terms of satisfaction in the order Amazon-Flipkart-Snapdeal, especially because of Amazon’s excellent record in refunding the amount for products returned without fuss. The prices of most products have been the cheapest on Amazon, even as that meant the rich company bearing some losses for more gains in the long run. The larger market-share holder Flipkart enjoyed the political loyalty of the numerically insignificant swadeshi-minded section of customers while Snapdeal grabbed news headlines more often for the wrong reason of being unable to sustain the costs. With the acquisition of Flipkart by WalMart, the competition is going to get stiff for Amazon, which has been switching from the exclusively online model to a brick-and-mortar plus e-tail set-up. And that is the best deal that the politically neglected but the most populous section of the country: the buyers. While hitherto competition-proof Indian retailers have cursed their customers with adulterated food, tampered weights and non-issuance of bills, the government loses crores worth of revenue too because of the third factor. If employees are considered to be yet another kind of consumers, they have been taken for a ride by the cartel of Indian shopkeepers too, as few workers received formal appointment letters and standard terms of job in accordance with the labour laws of the land. With foreigners as competitors now, while the buyer will get the products cheaper, the worker will get better terms of employment, too, as the Indian part of the competition will be forced to behave.

This is not to say that WalMart’s success is guaranteed in India. Its partnership with the Bharti group had failed, reducing it to cash-and-carry stores. Germany has shown that the apprehension of WalMart gobbling up small businesses can be falsified by aggressive pricing even by local traders — the kind of confidence the Indian businessman, brought up under successive socialist and anti-consumer governments, has unfortunately lacked since PV Narasimha Rao liberalised the economy. After years of having Big Bazaar and Reliance Fresh around, the owners of mom-and-pop stores must relax too, as the business scales of big and small retailers are incapable of mutual rivalry. As for the sentiments of the swadeshi activists — many of whom are ironically consumers rather than traders although the political movement has been largely led by the trading class/caste — assuming that Flipkart was an Indian company was no better than assuming that Micromax is an India-made smartphone. While Flipkart was founded by IIT alumni Sachin Bansal and Binny Bansal, the stakes of the founders had long shrunk to insignificance. SoftBank owned 20.8% of it. Microsoft and China’s Tencent Holdings were the other shareholders. For a year, the Bansals were no longer in operational roles, as Sachin had become the executive chairman in January 2016 and his replacement Binny was himself replaced as CEO by Kalyan Krishnamurthy, a representative of Tiger Global Management, Flipkart’s largest investor until WalMart bought 77% of it for $16 billion. With investments of Alibaba Group, Foxconn, SoftBank, Ontario Teachers’ Pension Plan, Brother Fortune Apparel, etc, Snapdeal did not remain a de facto Indian company either. The panic button being pressed by some ill-educated or deliberate propagandists — perennially and incorrigibly paranoid about WalMart — can, therefore, rest. With various far-fetched analogies, the country is being told another ‘East India Company’ is arriving again for the past 27 years somewhat like those fringe cults that announce the end of the world every few years.

The biggest dampener for swadeshi activists in this affair is the fact that WalMart did not re-enter India riding on a permission from the Narendra Modi government. The acquisition has followed a natural market route and, therefore, the likes of Swadeshi Jagaran Manch’s Ashwani Mahajan, CPM’s Sitaram Yechury, AAP’s Arvind Kejriwal et al cannot hold the Union government to ransom. Modi had done what he could by maintaining the status quo of strict curbs on foreign direct investment in multi-brand retail, which was, in fact, the reason for the flop of WalMart’s first India venture that had begun in 2007. If the second attempt succeeds in turning practically into a multi-brand retail business, another section of the population, misguided by politicians since the Independence, will benefit immensely: farmers. Rather than cribbing year after year for loan waivers and higher minimum support prices, they will sell their crops directly to the retainer rather than middlemen and extract a higher price for their produce like businessmen dealing in non-farm products. And yet, since the field-to-shop chain would be much shorter, end users will get their food cheaper. The only people opposed to this proposition would be vested interests who wish to maintain monopolies and cartels.