Walmart-Flipkart deal augurs well

Global retailer and e-commerce behemoth Walmart’s acquisition of a majority 77% stake in home-grown online retailer Flipkart is a win-win for all and a welcome development for the Indian economy. The deal will help in kick-starting the struggling economy, as retail business is likely to touch $1.1 trillion by 2020. Of this, e-commerce will account for $700 billion. India has replaced China as the most promising market for retail expansion and the deal has not come too soon. This will help in reviving the rural economy by raising farmer’s income and freeing them from the clutches of middlemen. The world over, food items account for 70% of the retail business, and so, the agricultural sector will benefit most from it. Walmart will bring with it the wherewithal to improve efficiency in retail trade through better logistics and technology, and will thus, enable fresh food products to reach directly from farm to the dining table. It will facilitate the creation of a safe online space for small sellers as well, and help to generate employment. According to a market study, online selling will generate 1.3 million jobs by 2020, mostly in smaller towns. Each seller will create additional three-four jobs, which means, a total of five million new jobs – not a small number when the job market is seeing a dismal phase.

The fear that multi-brand retail and e-commerce will kill the kirana stores is unfounded. With 7.5-8% annual GDP growth, retail and e-commerce business will only double in the next five years. Multi-brand retail and e-commerce will tap the increased growth without posing a threat to the kirana business, which too, will grow with the size of pie becoming larger. The world over, the “mom and pop” stores, which are basically convenience stores, co-exist with supermarkets and e-commerce. Nearly 60 million Indians shop online. With a growing middle-class and with over 350 million smartphone users, online shopping can only grow exponentially. With Walmart betting big on the Indian market, Amazon is not going to lag behind. In all likelihood, it will pump in more into Indian e-commerce business to take on the competition, making it more robust and exciting.

There is yet another fear that cheap Chinese goods will flood the Indian market with the entry of Walmart, throwing Indian manufacturers out of business. Many had in 1991 expressed similar fears that liberalisation would open the flood-gates to foreign companies. This turned out to be unfounded over time. In fact, India’s exports, too, particularly those of agri-products, will pick up with Walmart sourcing more Indian goods for its global operations.

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Walmart-Flipkart deal augurs well

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