India has a rich history of businessmen wrapping themselves in the flag to get protection from imports or even foreign firms, but Flipkart co-founder Sachin Bansal and Ola founder Bhavish Aggarwal were probably the last people you would expect in this list.
India has a rich history of businessmen wrapping themselves in the flag to get protection from imports or even foreign firms, but Flipkart co-founder Sachin Bansal and Ola founder Bhavish Aggarwal were probably the last people you would expect in this list. For one, both are children of the new economy, where technology replaces leaders like Blackberry or Nokia almost overnight and where hungry capital chases good ideas but, just as quickly, decides to retreat, even pull the plug for a variety of reasons—yet, at the peak of exuberance, many ideas that don’t even deserve funding get funded, others get excessive valuations. Two, while both firms have done a lot of work to be where they are today, there is little doubt much of this wouldn’t have been possible had they not got zero-cost equity funding from abroad. Indeed, in the case of e-tailers like Flipkart, it is kiranas and traditional brick-and-mortar firms who have a genuine grievance since it is free capital that allowed e-tailers to offer huge discounts to entice customers.
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Yet, at the Carnegie India Global Technology Summit function, Bansal had no problem talking of how India needed to follow what he felt was the Chinese model—give us your capital, but we don’t want your companies. Aggarwal railed against what he said was predatory pricing and the fact that a foreign firm could get to meet the prime minister faster than he could. Apart from the fact that it is not clear why global firms would be willing to part with their capital if they don’t get a slice of the market, both Bansal and Aggarwal would realise the issue is not just capital, it is also expertise the foreign firms are bringing—it is not just Suzuki’s capital that made Maruti a global player, it was Suzuki’s technology. Indeed, in sector after sector, the impact of foreign competition and capital has been to make Indian companies stronger—when, in even a post-Trump world, import tariffs are going to remain low, a firm that cannot be globally competitive cannot be locally competitive either. If an Amazon or an Uber are to be kept away, what is the guarantee that a Flipkart or an Ola will continue to innovate to give better service/quality to the consumer? India cannot go back to the 1970s where, sheltered by high tariff walls, local firms got away by offering shoddy products like the Ambassador to consumers. The fears raised about data protection—only when Indian players dominate the market will consumer data remain secure—are equally specious. If India’s laws on privacy/security are weak, or poorly enforced, even Indian firms will misuse the data—if tough laws are enforced, even foreign firms will protect the data. The fully-foreign Vodafone, to cite an example, is not accused of giving data of Indian subscribers, because the law prohibits it, and this would also hurt its business. Given neither Bansal nor Aggarwal protested when the money was coming in freely, it is clear funding worries are driving their swadeshi rhetoric. Worse, given how many home-grown firms have given global biggies a run for their money—think ThumsUp or Nirma among others in the past and, more recently, Micromax—such protectionist talk suggests the market leaders are already conceding defeat.