Exposing regulatory violations by Quick Commerce platforms targeting kirana stores
Bhubaneswar:13.11.2024-(Trade Union General Secretary Sudhakar Panda) The Confederation of All India Traders (CAIT) released a White Paper today in New Delhi, raising serious concerns over the practices of Quick Commerce (QC) platforms like Blinkit, Instamart, and Zepto,Swiggy etc which are allegedly undermining the foundation of India’s retail economy. Speaking at the press conference, CAIT Secretary General and Chandni Chowk MP, Shri Praveen Khandelwal, condemned these platforms for misusing Foreign Direct Investment (FDI) to dominate suppliers, control inventory, and fund predatory pricing – strategies that create an unfair playing field, making it nearly impossible for the 30 million Kirana stores to compete. These platforms are aggressively pushing small retailers out of the market,” Khandelwal said
CAIT National Chairman Shri Brij Mohan Agrawal, Shri Kailash Lakhyani, Chairman & Shri Arvinder Singh, President of All India Mobile Retailers Association (AIMRA) respectively, Shri Vipin Ahuja, President, CAIT Delhi, Shri Sumit Agrawal,Joint General Secretary, CAIT and other senior trade leaders attended the event to support CAIT’s call for regulatory action.The White Paper provides detailed examples of how QC companies are violating FDI policies and the Competition Act of India. These violations, coupled with a lack of transparency, harm small businesses and distort the retail ecosystem. CAIT urged regulatory bodies to intervene, ensuring that QC platforms adhere to fair practices and protect the interests of small traders.
Shri Khandelwal acknowledged Union Commerce Minister Shri Piyush Goyal’s recent statements, which reflect similar concerns, underscoring that such unfair practices by QC platforms will not be tolerated. Shri Goyal emphasized the importance of fostering alignment between QC platforms and local Kirana stores for faster deliveries without bypassing traditional retail, which is greatly welcome by business community of the Country.
Violation of FDI policy and misuse of FDI to fund predatory pricing
The White Paper revealed that QC platforms, backed by over ₹54,000 crores in FDI, have not invested in creating infrastructure or long-term assets. Instead, they use FDI to subsidize operational losses, control supply chains, and offer predatory discounts through a small group of preferred sellers. These practices have allowed QC platforms to capture 25-30% of the market once dominated by Kirana stores, putting many traditional retailers on the brink of closure.
Unfair Practices and Regulatory Violations
The White Paper outlines multiple regulatory violations by QC platforms, including:
1. Restricted Market Access: QC platforms limit competition by securing exclusive deals with preferred sellers, which blocks any independent retailers.
2. Predatory Pricing: Deeply discounted pricing funded by FDI squeezes Kirana stores out of the market, causing adverse effect on competition.
3. Lack of Transparency: To hide the violation of FD and anti-competitive practices, QC platforms omit key seller information, preventing consumers from making informed choices.
4. FEMA Violations: QC companies bypass FEMA guidelines by controlling inventory indirectly through preferred sellers, a practice prohibited under India’s FDI policies.
Competition Act Violations
The White Paper notes that QC platforms are also violating the Competition Act, 2002. Their agreements with preferred sellers have restricted market competition and limited consumer choice:
1. Anti-Competitive Agreements: QC platforms use vertical agreements to control supply, pricing, and distribution, causing significant harm to competition.
2. Abuse of Dominant Position: These platforms use their dominant position to manipulate prices and control inventory, disadvantaging independent sellers.
