As quick commerce startups thrive, concerns are mounting over their impact on small kirana and retail stores. Praveen Khandelwal, Lok Sabha MP and Secretary General of the Confederation of All India Traders (CAIT), warns that these businesses, fueled by foreign direct investment (FDI), are undermining local retailers and distorting competition. He speaks to Outlook Business over the potential violations of antitrust norms and foreign investment rules, claiming quick commerce could eventually drive 3 crore kirana shops out of business.
Edited excerpts:
Was the government not aware of the violations that quick commerce companies have been alleged of?
The government has been playing its role well. It made the Competition Commission of India (CCI) and also set the Foreign Direct Investment (FDI) norms. These acts have several provisions for any non compliance. Had the government not taken cognizance of the violations, there wouldn’t have been reports from CCI or raids on warehouses of several companies in this business.
I will also urge union minister Piyush Goyal and Prahlad Joshi to take strict actions, as with every new day, quick commerce is moving one step closer to destroying the business of small retailers. The government has its eyes on the matter and I can assure you that it will ensure that no unfair practices are tolerated.
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What are the major violations done by quick commerce companies that you are talking about?
These platforms like Blinkit, Instamart, Zepto etc are openly violating many rules, that is the reason why they have been able to capture more than 30 per cent of the market, which was dominated by kirana stores.
Blinkit and its likes, which hold the largest market share in QC, are expanding on their dark store model and using them as warehouses to store, package and label inventory, which is a clear violation of FDI norms. They are misusing FDI to dominate the supply chain and control inventory. Out of the Rs 54,000 crore FDI, only Rs 1300 crore has been used to build long term assets, rest has gone to funding their losses.
Violations of FDI Policy 2000 and FEMA Act 1999 Act are at the core. Again, deep discounting and predatory pricing is not allowed, that is a violation of FEMA,they are controlling inventory through their preferred sellers, all of this has to stop.
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Do you mean to say that the dark store model is at a risk now, especially at a time when companies are planning to double down on dark stores.
Of course, dark store models are themselves at a threat and one day they will have to shut down if they don’t comply with the market spirit. They are clearly not allowed to hold inventory and control the market supply. They should just deliver it from one place to another, not do anything in between.
They might be expanding on this model but this is creating an unfair playing field, as they are resorting to unfair practices. Anyway, you will notice that the quality of the products that you receive from quick commerce is not top-notch, they are products that are on the verge of expiry.
We just saw a case where products were labelled at a future date of packaging, it is clear how things are working inside these warehouses. There have been several cases and we will also take up this matter with all concerned departments including the food safety department.
How do you think quick commerce can work in harmony with the kirana economy?
Union minister Piyush Goyal has also highlighted that both the ecosystems can thrive, given they follow fair practices. Quick commerce has to be aligned with kirana stores for faster deliveries, they should tie up with mom-and-pop stores, because that is what they were originally meant to do, facilitating the delivery. This step would help quick commerce thrive and also save crores of people from losing their livelihood.
We know that everything is going digital, but we can’t destroy the core of our traditional retail economy, it has to co-exist. Everyone is allowed to grow, but not at the cost of traditional retail stores’ existence. The kirana community will welcome every innovation, if it comes without posing a threat to them and bypassing their business.
Also Read: Quick Commerce Threat to Kiranas in Rural Areas Cannot Be Ruled Out, Says VilCart’s Prasanna Kumar C
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