Zomato and Swiggy delivery partners seen in this collage.
Credit: iStock Photos
New Delhi: Quick commerce platforms like Blinkit, Instamart, and Zepto are using foreign direct investment (FDI) to fund deep discounts and cover operating losses, which is causing an adverse effect on competition in the sector, the Confederation of All India Traders (CAIT) said on Wednesday.
In a ‘white paper on quick commerce’ the traders’ body noted that three leading quick commerce platforms have received Rs 54,000 crore in FDI, of which only Rs 1,300 crore (2.5 per cent) has been used to create real assets or infrastructure.
These issues are being raised by CAIT at a time when Swiggy and Zomato are already the subject of a probe by the Competition Commission of India. Both companies have denied any wrongdoing.
“It is estimated that over 50 per cent of the FDI may have been spent covering operating losses incurred due to practice of predatory pricing, and large part of the remainder used to provide subsidised warehouses, logistics, inventory, and delivery systems to their preferred sellers,” it said.
CAIT Secretary General Praveen Khandelwal alleged that quick commerce platforms have violated multiple laws, including FDI and FEMA regulations, which prohibit foreign-backed marketplaces from owning or controlling inventory.
Khandelwal is also a Lok Sabha MP representing the ruling Bharatiya Janata Party (BJP)
The white paper noted that Blinkit (Zomato), Swiggy (Instamart) and Zepto bypassed these rules by setting up preferred seller networks and using dark stores to indirectly control inventory.
“Their misuse of FDI to finance operational losses due to their predatory practices and deep discounting not only breaches FEMA guidelines but also causes appreciable adverse effect to competition and is causing irreparable loss to small traders,” it said.
Khandelwal said that the platforms are misusing 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.
The white paper also noted that quick commerce platforms are violating the Competition Act, 2002. “Their agreements with preferred sellers have restricted market competition and limited consumer choice,” it said.
CAIT called for an immediate regulatory intervention to hold quick commerce platforms accountable, emphasising that unchecked growth driven by foreign capital poses a significant threat to India’s small retail ecosystem.
“Violations of FDI Policy 2020 and FEMA Act 1999 are at the core of the quick commerce platforms’ operations, with these platforms using FDI for unsustainable predatory pricing rather than asset creation or infrastructure development,” it said.