Press Release
The gobbling up of Flipkart, the Indian online retailer and the much trumpeted Indian e-commerce “start up business” by Wlamart, the biggest American MNC and world’s largest retailer by spending $ 16 billion once again exposes the hollowness of Modi’s flagship projects like “Make in India”, “Start-up India”, etc. As chief minister of Gujarat, Modi himself was in the forefront of vehemently opposing the Manmohan government’s liberal approach to the Indian entry of foreign retailers.
When it offered certain concessions for foreign single-brand retailers, in a booklet brought out on FDI, Modi at that time called it a “betrayal” and even characterized the Manmohan regime as “government of foreigners”. But once ascended to the throne, without any qualm, and in the most duplicitous manner, he has allowed free entry of foreign single-brand retail through the automatic route. Ironically, when the UPA government allowed FDI in single brand retail with an “outsourcing clause” (requirement of 30 percent local sourcing), Modi who always speaks of patriotism from rooftops has gone to the extent of even doing away with the restrictive provision for 30 percent sourcing from Indian local players–a provision which he himself initially has incorporated as an essential component of his star program ‘Make in India’.
Now, among other neoliberal moves, it is this policy shift by the Modi regime which is going to destroy the productive base of the Indian economy that has enabled Walmart to enter Indian retail market through this backdoor deal which is also the world’s biggest e-commerce deal. Unless the government pursues a pro-national economic perspective and installs special provisions for protecting domestic businesses and local producers, in a globalized atmosphere it is natural on the part of Flipkart like enterprises easily succumbing to the predatory competitive tactics pursued by global giants like Walmart, Amazon, Alibaba, etc.
In the specific case of Walmart, in spite of being the biggest MNC in the world with an annual turnover of around $500 billion, it is finding it difficult to compete with its Chinese counterpart Alibaba on account of several product regulations brought out by Chinese imperialism to protect its market. Though Walmart started its Chinese operations in 1996, two years before the founding of Alibaba, recently Walmart has forced even to pay huge fines for violating Chinese regulations.
Still China continues to be the largest procurement source for Walmart—the latter procures almost two-thirds of its products from China due to its lowest wage rate. Walmart is also facing problems to sell the Chinese brands in the US on account of Trump’s economic nationalist and protectionist policies against China. Now Walmart is eagerly searching for overcoming its underperformance in USA and China (while China allows Walmart to procure low-priced goods, selling them in China is not easy) by capturing other markets. In this context, recent policy liberalizations announced by Modi regime pertaining to FDI in retail have opened up new avenues for Walmart. What we are going to witness in the coming days is a flooding of the Indian market with cheap Chinese products.
What is in store now is a biggest attack on small manufacturers, millions of retailers and above all the vast majority of workers who are already condemned to live without any job and avenues of subsistence. Though RSS-affiliated SJM has come forward opposing the move, it is not yet bold enough to point out the fact that Modi is openly violating the poll promise of the BJP in the 2014 general election.
Once Walmart, world’s biggest MNC with its notorious tactics of “dumping” and cut-throat competition enters the retail scene, and that too in a context of local sourcing no more mandatory, the trend now is towards devastation of around 50 million unorganized retailers together with hundreds of thousands of tiny, small and medium enterprises and sky-rocketing of joblessness in the country. Over the last several years, successive governments have been denying permission to Walmart. While China is becoming inhospitable to Walmart, Modi government is laying red carpet for it to India with an estimated $ 1.3 trillion e-commerce market in five years. What is occurring is not a mere lack of political vision, but a heinous betrayal of country’s national interest.
K N Ramachandran
General Secretary
CPI (ML) Red Star
11 May 2018
