Traders’ body Confederation of All India Traders (CAIT) on Wednesday released a white paper alleging quick commerce players such as Zomato-owned Blinkit, Swiggy Instamart, Zepto, etc., misusing FDI (foreign direct investment) regulations, manipulating the market, and driving small retailers particularly kirana stores out of business.
CAIT said that instead of using FDI to build assets, quick commerce players are funding deep discounts and covering operating losses. “This predatory pricing is pulling customers away from kirana shops, crippling their ability to compete,” the white paper said.
“Additionally, they are using FDI to control logistics, warehouses, inventory, and delivery systems, offering these services to a select group of preferred sellers at negligible, non-competitive prices. This enables them to dominate sellers and manipulate pricing.”
CAIT said the quick commerce companies have received a massive FDI inflow of more than Rs 54,000 crore, of which only Rs 1,300 crore (2.5 per cent) has been used to create real assets/infrastructure.
The traders’ body alleged that over 50 per cent of the FDI is estimated to have been spent covering operating losses incurred due to the practice of predatory pricing, and a large part of the remainder used to provide subsidized warehouses, logistics, inventory, and delivery systems to their preferred sellers.
It added that FDI and FEMA laws, which prohibit foreign-backed marketplaces from owning or controlling inventory, have been violated.
“Blinkit, Instamart and Zepto bypass these rules by setting up preferred seller networks and using dark stores to indirectly control stock/inventory,” the white paper said.
Additionally, these companies breached the Consumer Protection Act by failing to provide information of sellers to the consumers in a transparent manner.
“Zepto omits seller details entirely, while Blinkit offers minimal information, preventing consumers from making informed choices. As a result of these illegal and anti-competitive practices, kirana stores are facing sharp declines in their business and many of them are at the brink of closure.”
“This shift has pushed nearly a quarter of India’s 30 million Kirana stores to the brink of closure,” the paper alleged.
