Confederation of All India Traders (CAIT), in a statement, urged the government to conduct close scrutiny of the deal that it claimed will have greater ramifications on retail trade and the economy.
US retail giant Walmart Inc has announced acquisition of 77 per cent stake in Flipkart in its biggest takeover till date. The deal values the 11-year old Indian e-commerce firm at USD 20.8 billion.
"CAIT has decided to challenge Walmart Flipkart deal since the deal is circumventing laws and will offend FDI policy once it is implemented and will create an uneven level playing field beside accomplishing hidden agenda of Walmart to reach out to offline trade through e-commerce way," it said.
It added that its team of lawyers is studying the deal and very shortly, CAIT will move to appropriate authorities and seek legal recourse.
When contacted, Flipkart did not respond to emails.
Walmart India Chief Corporate Affairs Officer Rajneesh Kumar said the company has been in India for many years now and has been contributing to the country's economy through local skilled job creation, sourcing from small farmers and SME suppliers.
"We believe that this partnership will be beneficial to all stakeholders and Walmart will continue to be an economic contributor. The partnership (with Flipkart) will create millions of jobs through development of supply chains, direct farm procurement will help in increasing farmers income and take forward government's vision of 'Make in India' initiative and supporting SMEs, among others," he added.
Traders' bodies, including RSS-affiliate Swadeshi Jagran Manch, have opposed the deal and claimed that this could further hurt sellers' business. E-sellers' representative body, AIOVA has urged the government to set up a regulatory body to monitor various e-commerce marketplaces and their policies towards merchants on these platforms.
CAIT, in its statement today, also demanded that a national policy for e-commerce be framed at the earliest and a regulatory authority be constituted to regulate the online retail business in India.
"...and till such time, the deal should be put in abeyance by the Government and a close scrutiny should be held in the entire deal," it added.
CAIT Secretary General Praveen Khandelwal said one of the key issues in the matter was that of control of user data.
"...whoever controls the platform, controls data and digital intelligence. Therefore, being the controller of the Company, Walmart may use the data and other information as per its will and wish and the possibility of compromising the data can not be ruled out," alleged Khandelwal.