SJM seeks meeting with Goyal to discuss Flipkart deal

NEW DELHI, JUNE 3: Keeping the pressure on the government, the Swadeshi Jagaran Manch (SJM) will meet Finance Minister Piyush Goyal on FDI violation issues in the $16-billion Walmart-Flipkart deal.

Ashwani Mahajan, National Co-Convener, SJM, told BusinessLine on the sidelines of an event organised by the organisation that the SJM had sought a formal meeting with the Finance Minister to take up the investigation on the legality of the deal.

“It is important because the entry of Walmart means the end of farmers, small traders and manufacturers, who are already under stress,” he said.

SJM had written to the Department of Industrial Policy and Promotion (DIPP) on May 24 to initiate an inquiry into the “dubious deal” between Flipkart owners and Walmart — which has been written outside, but for all tangible and intangible assets placed in India. It also requested the DIPP to make a strong representation before the Competition Commission of India to keep in abeyance the takeover before the results of the enquiries are available.

Additionally, SJM alleged that Flipkart is playing both in the B2B and B2C space through its firms such as WS Retail Services, which doesn’t attract FDI and thus violating the norms. Having its base in Singapore, it enables Flipkart to evade taxes in India.

RBI’s purview: DIPP

The DIPP, in its response to SJM’s complaint, had directed the FDI violation issues to the Reserve Bank of India and Enforcement Directorate on May 28 and also urged the CCI to carry out the investigation.

The DIPP stated that while it is entrusted with the formulation of FDI policy across sectors, including e-commerce, violations are governed by penal provisions in the Foreign Exchange Management Act (FEMA), 1999, administered by the RBI and enforced by the Enforcement Directorate under the Finance Ministry.

The voluminous data Walmart could have access to might be a major reason for the deal and has the potential to cause data security issues, said Murli Manohar Joshi, Member of the Lok Sabha and a senior BJP leader at the same event here on Saturday.

Scope for misuse

Joshi said that at a time when consumer data is captured at the click of a button, the question is what the deal would mean for the data collected on Indian citizens by Flipkart. All kinds of data are captured through the platform.

“After the acquisition, will the data go to Walmart and if it does, what is the guarantee that they will not sell it to other companies say, pharmaceuticals or misuse the data for their own gain?” he asked.

These data could also be used to promote their own products in the market. For instance, a farmer sells his product to a company. While it may look like a legitimate process without the involvement of middlemen, there is a possibility that the company will start pushing its own brand as a ground for purchasing from farmers.

Farmers will not have an option and Indian companies cannot compete as there are not enough resources. Additionally, this deal would encourage more overseas players coming into the retail trade, such as Amazon and Alibaba, he added.

“This will adversely affect our ecosystem. We should have the freedom and independence to decide how far they can go,” Joshi said.