CAIT accuses Blinkit, Zepto, Instamart of exploiting FDI to undermine kiranas

The Confederation of All India Traders (CAIT), in a white paper, has accused quick commerce platforms like Blinkit, Swiggy Instamart, and Zepto of misusing Foreign Direct Investment (FDI) to subsidise unsustainable discount and dominating supply chains to push small retailers such as kirana stores out of the market.

Detailing violations of India's FDI policies and the Competition Act, the white paper alleges that quick commerce companies, by various methods including predatory pricing, controlling inventory and dominating suppliers, have restricted market access for independent retailers, resulting in a significant drop in business for kiranas.

The apex trade body alleges that Indian quick commerce platforms have channelled more than Rs 54,000 crore in FDI to fund deep discounts and operational losses, violating FDI policies that restrict the use of foreign capital for asset creation rather than subsidising ongoing operations. 

In the white paper, CAIT notes that only around 2% of this FDI has gone into infrastructure instead of building assets, with the rest used to provide warehousing, logistics, and subsidies for a small network of preferred sellers.

It also said that quick commerce platforms work only with a select few preferred sellers, which has blocked independent retailers and stifled competition in the retail ecosystem.

"Although quick commerce platforms present themselves as marketplaces, they control the entire supply chain. By restricting access to a closed group of few preferred sellers, they stifle competition and manipulate inventory," the report stated.

Blinkit, for example, depends on five preferred sellers who manage most of its sales, thereby controlling the inventory through intermediaries. Zepto reportedly bypasses third-party sellers entirely, functioning as an inventory-based model—an operation strictly prohibited under India’s FDI policy.

CAIT says that companies bypassing inventory control laws through exclusive agreements with preferred sellers and creating a vertically controlled market that limits independent competition violate the Foreign Exchange Management Act (FEMA) guidelines.

"These platforms are not only controlling the supply chain but also using FDI to distort market competition," said CAIT Secretary General and MP Praveen Khandelwal, at the press event where the white paper was released.

The FDI violation has also encouraged quick commerce platforms to engage in predatory pricing to offer discounts 10-20% below local kirana store prices.

According to CAIT, such deep discounting has enabled QC platforms to seize approximately 25-30% of the market share that traditionally belonged to kirana stores, edging these small retailers closer to shutdown.

Warning that these practices pose an 'existential threat' to India’s 30 million kirana stores, CAIT called for immediate regulatory action.