US-based Amazon and Uber kept a conspicuous silence on Thursday after the poster boys of Indian Internet entrepreneurship — Flipkart Chairman Sachin Bansal and Ola Chief Executive Officer Bhavish Aggarwal — joined forces to make a strong pitch for policies that will favour homegrown companies.
Some key players in the country’s startup sector weighed in on the side of Bansal and Aggarwal, and several chose to remain silent. A few also denounced the call for what they termed was a “protectionist” stance.
Vijay Shekhar Sharma, the founder of digital payments company Paytm, said while he was unaware of what specific measures were being sought by Bansal and Aggarwal, “they (Flipkart and Ola) are both winners”.
Speaking at a technology conference in Bengaluru on December 7, Bansal and Aggarwal called for an India-centric approach in regulations to counter the force of capital wielded by overseas companies. Bansal’s Flipkart competes with Amazon while Ola, cofounded by Aggarwal, is locked in a battle for market share with Uber, the world’s most valuable startup.
Sharma, whose firm is backed by Chinese ecommerce major Alibaba and its affiliate Ant Financial, stressed the need to encourage Indian firms. “There is a rush of international companies in India. I do believe that we should root for Indian companies created by Indian entrepreneurs so that future entrepreneurs are not afraid to take these calls.”
Paytm’s Sharma however was of the view that open playing fields are advantageous to the consumer. Amazon and Uber declined to comment for this report.
The debate over government protection for local companies, which has been going on in muttered tones for a while now, has become louder with Bansal and Aggarwal speaking out publicly.
Nasscom, a lobbying group that helped power India’s rise in the IT outsourcing business, said it believed there was “need to ensure a level playing field in the country with open, fair competition”.
“Lack of competition and openness has not served us well in the past,” said R Chandrashekhar, its president. “However any complaints of harm or injury caused to companies by unfair competition should be looked into by the government and regulators,” he said.
Startup founders are increasingly aware that driving local innovation is key to their success and that will also build more secure moats to ward off competition. “If local nuances can give you a unique business moat, it can become a world play,” said Paytm’s Sharma, referencing the example of South Korea’s Samsung, which outgunned Japan’s Sony in the consumer electronics market.
In India, both Flipkart and Ola have driven local innovations, including cash-on-delivery, which boosted online retail when introduced by the Bengaluru company in 2010.
Both Bansal and Aggarwal, whose respective companies have raised millions of dollars, primarily from overseas investors, pointed out on Wednesday that the country’s policymakers could do well to follow the example set by China a decade and half back.
Amazon, the world’s largest online retailer, has not fared well against local competition such as the Alibaba Group in China. More recently, San Francisco-based ride-hailing app Uber, the world’s most richly capitalised startup, was at the losing end of abitter and expensive war with local rival Didi Chuxing.
Bansal’s and Aggarwal’s comments also come at a time when risk capital investors have been increasingly pressuring portfolio companies to cut burn rates and focus on profitability. Over the course of 2016, Flipkart, which was valued at about $15 billion in its last funding round, has seen its valuation being cut by almost two-thirds by many of its mutual fund investors.
TV Mohandas Pai, chairman of Manipal Global Education, urged the PM to encourage local tech entrepreneurs.
Source: The Economic Times
Image Courtesy: qzprod.files
