After ceding control to investors, start-ups turn to govt for protection

A lobby group called Indiatech.org is being set up by Flipkart and Ola to represent the interests of local start-ups

After a year of failing to put pressure on the government to favour homegrown start-ups over multinationals, Flipkart's Sachin Bansal and Ola's Bhavish Aggarwal are setting up a lobby group —Indiatech.org — to represent the interest of local start-ups such as Flipkart, Ola and MakeMyTrip to the government.

In December 2016, Bansal and Aggarwal had publicly stated that the government should favour foreign capital and not foreign firms, a model similar to what China had followed. Their statements got them ridiculed in the industry, but several Indian start-ups began aligning with their movement to save themselves from deep-pocketed global rivals.

According to the Economic Times, the new lobby group will even appoint a former IAS officer as its chief executive officer and could include other large Indian internet firms such as Quikr and Hike Messenger as founding members. The grouping will look to become the Nasscom for the start-up space in the country.

R Chandrasekhar, the current president of Nasscom was formerly a secretary to the Indian department of information technology (IT). This makes him an ideal person to push for favourable policies for the country's IT and technology companies, given his understanding of how the government works. Indiatech.org will look to replicate this by bringing in a former bureaucrat.

While Bansal and Aggarwal’s movement now has a name, their demands are still as sketchy as ever. These same entrepreneurs, who had earlier sought minimal government intervention in the country’s fast-growing start-ups space, are now asking for maximum intervention, but only where it favours them.

In the case of Flipkart, Bansal essentially wants the government to favour money coming into the country from their own backers, such as SoftBank, rather than the money rival Amazon is bringing in. His point of contention has been that Amazon is using money earned from its global operations to fund a war against Flipkart in India, creating an uneven playing field.

However, some people from the Industry question how different is money coming in from SoftBank’s $100-billion vision fund from Amazon bankrolling its India operations?

When it comes to companies founded in India being given preference over multinationals, some argue that no company can be truly Indian if it raises money from foreign investors. In the case of Flipkart, it’s Indian founders have been sidelined and investor Tiger Global has been calling the shots with the intention of bringing back growth to maximising the company's value.

Ola CEO Bhavish Aggarwal, in a petition to the Karnataka High Court, had stated that its rival Uber had no regard for Indian laws and was here only for profits. Uber has been known to break laws globally and is currently under several large investigations, but the question is isn’t Ola’s intention also to drive profits? Even if Aggarwal might dream of revolutionising urban transport at the expense of profits, no investor is going to agree with them, be it an Indian or foreign investor.