The Confederation of All India Traders (CAIT) has raised objections over Flipkart-Aditya Birla Fashion and Retail proposed deal, stating that the proposed deal violates the government's FDI policy. Through this deal, Aditya Birla Fashion and Retail looks to raise Rs 1,500 crore by issuing a 7.8% stake to Walmart-owned Flipkart Group.
In this regard, the Traders' body wrote to Piyush Goyal, the Commerce Minister, requesting him to prohibit Aditya Birla Fashion and Retail Ltd (ABFRL) from directly or indirectly selling its inventory on the marketplace platforms owned/controlled by the Flipkart Group.
CAIT also urged the Minister "to not allow the proposed FDI unless they undertake that ABFRL will not be selling its inventory through any of the marketplace platforms owned/controlled by Walmart owned Flipkart Group."
Last week, ABFRL said that its board approved the proposed stake sale. The company is planning to utilize this fund to strengthen its balance sheet and accelerate its growth trajectory.
CAIT said in the letter to Goyal, “In its filing to the stock exchange, a clear intent to make ABFRL a preferred seller on the marketplaces owned and operated by Flipkart Group is shown which strictly violates the policy of the government.”
“The present FDI policy clearly prohibits a foreign company to venture in any forms of multi-brand retail trading (MBRT) including through e-commerce by having any equity interests in the sellers on the market-platform, or directly/indirectly controlling their inventory through side agreements, or under the garb of B2B e-commerce, the traders' body further stated.
It added, “The restrictive provisions in FDI policy, through press note 2 of 2018, were made to protect the small traders/kirana shopkeepers and Indian industry from the onslaught of capital duping by foreign multinational companies and any violation of such provision must be strictly dealt with.”