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Walmart is the US version of The East India Company: CAIT

Expressing concern that Walmart would adopt predatory pricing and deep discounting, the Confederation of All India Traders has written to commerce minister Suresh Prabhu protesting against the Flipkart-Walmart deal.

The traders’ forum has called Walmart as “the US version of The East India Company” and urged for an investigation into the  Walmart-Flipkart deal.

“Walmart is nothing but a US version of The East India Company which conquered the country,” CAIT said in the letter, adding, “It is highly regretted that some of the people for just merely earning the profit have sold major chunk of e-commerce to Walmart.”

CAIT also fears that Walmart would create an uneven playing field for other traders by giving deep discounts.

“It will source globally the cheapest material and will dump in the country to wipe out the competition. As of now, no rule or law exists which can put restrictions on such practises of any company,” the letter said.

“The ultimate object of Walmart is to enter the retail trade of the country,” it said, adding, “In the absence of any policy on e-commerce or retail trade, it would be easy for the Walmart to reach out to retail market, which otherwise it can not enter due to FDI policy.”

Walmart on May 9 announced that it has agreed to purchase around 77 per cent stake in Flipkart for USD 16 billion.

Recently, valuation expert Aswath Damodaran wrote about the Walmart-Flipkart deal in a blog post and said Walmart’s USD 16 billion investment in Flipkart may not offer the kind of expected returns to the global retailer. “If you are a Walmart shareholder, this is a negative signal and it does not surprise me that Walmart shares have declined in the aftermath. Staying with the life cycle analogy, Walmart is an aging, once-beautiful actress that has paid $16 billion for a very expensive face-lift, and like all face-lifts, it is only a matter of time before gravity works its magic again,” he said.