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Ola, Flipkart seek market protection against global rivals Amazon, Uber

They called the govt to allow foreign capital in India, but restrict foreign consumer internet companies from setting up shops

Alnoor Peermohamed  |  Bengaluru 

flipkart, ola

The founders of India's top two consumer and have called for enforcing protectionist measures against their global rivals and Uber, accusing these firms of dumping capital to buy customers to become monopolies in the country.

India is the world's last large open market where and are pitted against local rivals and respectively. Both firms have committed billions of dollars to capture India, giving tough competition to the local leaders, who have mirrored the business models of these two

E-commerce and ride-hailing, similar to all business that uses the to connect consumers with suppliers, tend to be monopolistic in nature. The company that gets the most users and vendors tends to dominate the business playing on the network effect, with the rival being a distant second. and dominate the market and many other markets globally and the gap with their rivals is growing.

Both Bansal and Aggarwal cite this reason to curb the expansion of and Amazon, calling the government to bring rules that only get foreign capital in India, but restrict foreign consumer from setting up shops.

In the past, India had policies for pharma, automobiles, IT and banking that encouraged local entrepreneurs to build a strong base before opening up for competition. Likewise, the country's Make in India policy for defence manufacturing looks at local development over foreign imports.

"But in the technology sector, this is not the case because it is naturally monopolistic. The cost of acquisition is zero, once you have something it happens to be accessible to everyone at the same time and that is the unique thing for which China's answer was to close down the market," Bansal said at a panel discussion moderated by at the Carnegie India technology summit on Wednesday. "I think what we need to do is what China did. They told the world we need your capital but we don't need your "

Uber, which burnt over $2 billion in China was humiliated by local rival Didi Chuxing forcing it to exit the Middle Kingdom for a minority stake in Didi. The resources, which had set aside for China is being diverted to India, besides the capital that was already allocated from the $ 3.5 billion it raised from Saudi Arabia's public fund.

Likewise, has committed over $5 billion since mid-2014 to capture the Indian e-commerce market, which has been dragging down its international margins.

Bansal and Aggarwal say both these rivals are burning money to capture market share but not adding any value to the Indian ecosystem, while local firms such as theirs are generating high-value jobs in the country.

"When a ride goes to for example in India, the higher-end jobs are being created in the and not in India. The capabilities in the ecosystem are getting created in the and not in India, while when it comes to the capabilities are being created in India," said Bansal.

Increased competition from and have not only hurt the Indian in expanding their business but also dragged down their valuations that have made it harder to raise fresh funds from global investors.

"When you see the capital story that's where the Indian ecosystem is at a disadvantage. Number one is that there's no local capital, we have to go abroad for capital and it's much easier for non-Indian to raise capital because they're profitable elsewhere," said Aggarwal. "You might call it capital dumping but it's a very unfair playing field for the Indian startups and something needs to be done about it. The consumer because it largely carries a monopolistic stake, a lot of irrational capital is thrown into the land grab."

Not all buy the arguments made by Bansal and Aggarwal. Anand Rangarajan, who is the engineering director at Google's Bengaluru research centre, says local can give competition to multinationals such as if they are able to build trust with the consumers.

"This has happened in markets such as Russia and South Korea and other markets where local players are very dominant. I don't think they're doing well just because they got protection, they're doing well because they've won the consumer trust and we couldn't do as good a job," said Rangarajan. 

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Ola, Flipkart seek market protection against global rivals Amazon, Uber

They called the govt to allow foreign capital in India, but restrict foreign consumer internet companies from setting up shops

They called the govt to allow foreign capital in India, but restrict foreign consumer internet companies from setting up shops The founders of India's top two consumer and have called for enforcing protectionist measures against their global rivals and Uber, accusing these firms of dumping capital to buy customers to become monopolies in the country.

India is the world's last large open market where and are pitted against local rivals and respectively. Both firms have committed billions of dollars to capture India, giving tough competition to the local leaders, who have mirrored the business models of these two

E-commerce and ride-hailing, similar to all business that uses the to connect consumers with suppliers, tend to be monopolistic in nature. The company that gets the most users and vendors tends to dominate the business playing on the network effect, with the rival being a distant second. and dominate the market and many other markets globally and the gap with their rivals is growing.

Both Bansal and Aggarwal cite this reason to curb the expansion of and Amazon, calling the government to bring rules that only get foreign capital in India, but restrict foreign consumer from setting up shops.

In the past, India had policies for pharma, automobiles, IT and banking that encouraged local entrepreneurs to build a strong base before opening up for competition. Likewise, the country's Make in India policy for defence manufacturing looks at local development over foreign imports.

"But in the technology sector, this is not the case because it is naturally monopolistic. The cost of acquisition is zero, once you have something it happens to be accessible to everyone at the same time and that is the unique thing for which China's answer was to close down the market," Bansal said at a panel discussion moderated by at the Carnegie India technology summit on Wednesday. "I think what we need to do is what China did. They told the world we need your capital but we don't need your "

Uber, which burnt over $2 billion in China was humiliated by local rival Didi Chuxing forcing it to exit the Middle Kingdom for a minority stake in Didi. The resources, which had set aside for China is being diverted to India, besides the capital that was already allocated from the $ 3.5 billion it raised from Saudi Arabia's public fund.

Likewise, has committed over $5 billion since mid-2014 to capture the Indian e-commerce market, which has been dragging down its international margins.

Bansal and Aggarwal say both these rivals are burning money to capture market share but not adding any value to the Indian ecosystem, while local firms such as theirs are generating high-value jobs in the country.

"When a ride goes to for example in India, the higher-end jobs are being created in the and not in India. The capabilities in the ecosystem are getting created in the and not in India, while when it comes to the capabilities are being created in India," said Bansal.

Increased competition from and have not only hurt the Indian in expanding their business but also dragged down their valuations that have made it harder to raise fresh funds from global investors.

"When you see the capital story that's where the Indian ecosystem is at a disadvantage. Number one is that there's no local capital, we have to go abroad for capital and it's much easier for non-Indian to raise capital because they're profitable elsewhere," said Aggarwal. "You might call it capital dumping but it's a very unfair playing field for the Indian startups and something needs to be done about it. The consumer because it largely carries a monopolistic stake, a lot of irrational capital is thrown into the land grab."

Not all buy the arguments made by Bansal and Aggarwal. Anand Rangarajan, who is the engineering director at Google's Bengaluru research centre, says local can give competition to multinationals such as if they are able to build trust with the consumers.

"This has happened in markets such as Russia and South Korea and other markets where local players are very dominant. I don't think they're doing well just because they got protection, they're doing well because they've won the consumer trust and we couldn't do as good a job," said Rangarajan. 

image
Business Standard
177 22

Ola, Flipkart seek market protection against global rivals Amazon, Uber

They called the govt to allow foreign capital in India, but restrict foreign consumer internet companies from setting up shops

The founders of India's top two consumer and have called for enforcing protectionist measures against their global rivals and Uber, accusing these firms of dumping capital to buy customers to become monopolies in the country.

India is the world's last large open market where and are pitted against local rivals and respectively. Both firms have committed billions of dollars to capture India, giving tough competition to the local leaders, who have mirrored the business models of these two

E-commerce and ride-hailing, similar to all business that uses the to connect consumers with suppliers, tend to be monopolistic in nature. The company that gets the most users and vendors tends to dominate the business playing on the network effect, with the rival being a distant second. and dominate the market and many other markets globally and the gap with their rivals is growing.

Both Bansal and Aggarwal cite this reason to curb the expansion of and Amazon, calling the government to bring rules that only get foreign capital in India, but restrict foreign consumer from setting up shops.

In the past, India had policies for pharma, automobiles, IT and banking that encouraged local entrepreneurs to build a strong base before opening up for competition. Likewise, the country's Make in India policy for defence manufacturing looks at local development over foreign imports.

"But in the technology sector, this is not the case because it is naturally monopolistic. The cost of acquisition is zero, once you have something it happens to be accessible to everyone at the same time and that is the unique thing for which China's answer was to close down the market," Bansal said at a panel discussion moderated by at the Carnegie India technology summit on Wednesday. "I think what we need to do is what China did. They told the world we need your capital but we don't need your "

Uber, which burnt over $2 billion in China was humiliated by local rival Didi Chuxing forcing it to exit the Middle Kingdom for a minority stake in Didi. The resources, which had set aside for China is being diverted to India, besides the capital that was already allocated from the $ 3.5 billion it raised from Saudi Arabia's public fund.

Likewise, has committed over $5 billion since mid-2014 to capture the Indian e-commerce market, which has been dragging down its international margins.

Bansal and Aggarwal say both these rivals are burning money to capture market share but not adding any value to the Indian ecosystem, while local firms such as theirs are generating high-value jobs in the country.

"When a ride goes to for example in India, the higher-end jobs are being created in the and not in India. The capabilities in the ecosystem are getting created in the and not in India, while when it comes to the capabilities are being created in India," said Bansal.

Increased competition from and have not only hurt the Indian in expanding their business but also dragged down their valuations that have made it harder to raise fresh funds from global investors.

"When you see the capital story that's where the Indian ecosystem is at a disadvantage. Number one is that there's no local capital, we have to go abroad for capital and it's much easier for non-Indian to raise capital because they're profitable elsewhere," said Aggarwal. "You might call it capital dumping but it's a very unfair playing field for the Indian startups and something needs to be done about it. The consumer because it largely carries a monopolistic stake, a lot of irrational capital is thrown into the land grab."

Not all buy the arguments made by Bansal and Aggarwal. Anand Rangarajan, who is the engineering director at Google's Bengaluru research centre, says local can give competition to multinationals such as if they are able to build trust with the consumers.

"This has happened in markets such as Russia and South Korea and other markets where local players are very dominant. I don't think they're doing well just because they got protection, they're doing well because they've won the consumer trust and we couldn't do as good a job," said Rangarajan. 

image
Business Standard
177 22