Indian govt rejects Amazon, Walmart’s bid to take over CSC Estores to reach the masses


The American retail behemoth, Walmart, in an effort to enter domestic rural markets, had approached India’s Ministry of Electronics and Information Technology (MeitY) with a proposal to buy out the entire chain of 1.4 lakh Grameen e-stores run and managed by the Common Service Centres (CSC).

However, this offer was rejected by the authorities.

The CSC, a special purpose vehicle of the IT Ministry, had in April 2020 launched the Grameen e-store concept, allowing the existing VLEs to start selling essential items in villages and other rural areas by connecting them to wholesalers in urban areas.

According to reports from Indian Express, while Walmart had proposed acquiring the estores, Amazon was pitching to upgrade the tech backend.

The proposal was made in February and had discussed the possibility of buying all the Grameen e-stores for expanding the reach of its own retail outlets as well as augmenting the capacity of Flipkart’s last-mile delivery.

“They made the offer, but the finer details were never discussed. We refused them in the very initial stages that Grameen stores will not be sold,” a senior government official said.

“We already have four kinds of apps and platforms which help run the entire ecosystem of Grameen e-stores. Amazon India’s proposal was that they offered us the technical know-how and offer of upgrading our stores. But that takes away our own independence and the freedom of the village-level entrepreneur (VLE). So we turned down their proposal as well,” another IT Ministry official said.

Ecommerce companies have faced off against the government over a number of policy issues, and the latest rejection is another sign of the government’s focus on promoting local entrepreneurship and small retailers.

The government of India had last revisited its FDI policies in 2018 that put certain restrictions on online marketplaces. The Press Note 2 which notified the FDI rule changes in December 2018 stated that foreign eCommerce players are barred from selling products from sellers in which the companies have an equity stake.

Under pressure from sellers as well as bodies such as the Confederation Of All-India Traders (CAIT) to investigate the marketplaces, the government is looking to introduce new regulatory rules once again targeting the seller companies instituted by eCommerce companies.

The new policy, while not finalized, is expected to severely impact the likes of Amazon India and Flipkart, who have in recent years been hounded by regulatory changes.

Over the last year, starting April, the Grameen e-store of the CSC have tied up with several leading global and Indian fast-moving consumer goods brands such as PepsiCo, Coca-Cola, Nestle, Tata Consumer Products, Shahi Masala, Adhar Foods, and Unibic biscuits.

“We have forayed into the delivery of white goods from companies and agencies such as Whirlpool, Tata Croma, and Bajaj Electric. Some more companies will be brought on board in months to come,” one of the officials said.