Source: Business Standard, Feb 13, 2017
Bengaluru: The plea of India’s largest homegrown e-commerce firms such as Ola, Snapdeal and Flipkart to the government for protecting them from global competition may have fallen on deaf ears, as the centre is gung-ho over the idea of attracting investments from wherever it wants to come.
“Not a single sound or whisper of protectionism is being heard in India, it’s only being heard in developed economies outside. That in itself is a tribute to the fact that India is willing to accept investment from wherever the investment wants to come,” said Arun Jaitley, Minister of
Finance, at the Make in India event in Bengaluru on Monday.
Jaitley, who was speaking on his experience of attendingindustry events across the country over the years, said that he had witnessed a positive change in the overall business environment. He added that the government was now tuning its policies in support of bringing in those investments from abroad.
However, the hotly contested Indian e-commerce space seems to have become an outlier with this respect. In the past few months, leaders such as Ola and Flipkart have stepped up their demand for India to close its doors for foreign competition such as Uber and Amazon, who they accuse of “capital dumping”.
Ola was the first to raise a voice in its affidavit to the Karnataka High Court in June last when it became party to the dispute by Uber, which questioned the constitutional validity of Karnataka to regulate taxi aggregators. This was, followed by a call by Sachin Bansal, co-founder of Flipkart who made a public statement that India should say yes to foreign capital but no to foreign companies.This set the stage for a raging debate within the community with clearly demarcated sides beginning to emerge arguing for and against government protection.
They were supported by Vani Kola, founder of Kalaari Capital, a venture capital firm, which counts Ratan Tata as an advisor. Kola wrote a blog on the need for protecting Indian fims such as Ola,Flipkart and Snapdeal against global rivals such as Uber and Amazon, saying they were not generating value to the local economy.It’s not that Flipkart, Ola or Snapdeal haven’t been able to bring in foreign capital into the company. In the past few years, the three companies have raised a combined $6 billion largely in foreign capital. However, as global competition began putting pressure and investors began demanding returns, the pipeline of money has dried up.