India tech start-ups ask for government support as global businesses threaten

Demands the Indian federal government to intervene and protect area companies are part of a narrative in the making for greater than a yr. Notably, at a meeting last December, Sachin Bansal, co-founder and executive chairman of Flipkart recommended that the Indian federal government must do “what China have 15 years ago and tell the universe we are in need of your capital, but we don’t want your companies.”

Likewise in attendance at that conference, Bhavish Aggarwal, the CEO and founder of Ola, echoed Bansal’s suggestion: “There is a narrative of innovation that non-Indian companies espouse, but the real fight is in capital, not innovation. The marketplaces are staying distorted by capital,” he said at the time.

Their views were met with a blended response from industry leaders, some of whom pointed out the irony that both Flipkart and Ola have raised a lot of their capital from foreign firms. Regardless, some claim the stakes will be too much for government inaction.

“If the federal government doesn’t wake up, it will find Silicon Valley kill off a big segment of its entrepreneurship ecosystem and problem its leading retail and technology firms,” Vivek Wadhwa, tech entrepreneur and distinguished fellow in Carnegie Mellon University’s College of Engineering, told CNBC.

“Foreign companies will collect massive levels of private data about every Indian citizen – a lot more than the Indian federal government has got. Facebook and Google will have the tools to sway Indian open public judgment and affect elections. That is dangerous for just about any democracy,” he added, saying he believed the federal government should study from China, which he says recognized very in early stages that if it allowed Silicon Valley giants to dominate its internet, they would hurt local companies.

Chinese companies are actually rivals to Silicon Valley, and organizations like Tencent and Alibaba lead the country’s internet market. Previous month, China’s Tencent strike a market capitalization of $500 billion.

Along those lines, Vijay Shekhar Sharma, founder of e-commerce and electric payment company Paytm, recently said in a Twitter content that “India is efficiently letting modern universe East India Companies own its Internet.”

Alibaba-backed Paytm is facing heat from services by global companies. Its wallet software, employed by over 200 million users in the united states, has seen strong expansion of late, but others are interested in relocating available. Google introduced Tez obligations application for India in September, and it has recently amassed 12 million clients, the company said. On top of that, Facebook’s WhatsApp, employed by a lot more than 200 million users in India, is reported to be considering ideas to integrate a payment alternative in its app. Paytm declined to comment for this story.

Some warn, however, that replicating a strategy similar compared to that of China could go terribly incorrect.

“It is counter-productive to check out China selectively and cherry-pick parts of protectionism we like,” said Prasanto Roy, vice president and mind of the web, Mobile and E-commerce Council at the National Association of Program and Services Companies – a business group setup in 1988 for India’s then-nascent computer software and IT industry.

“Protectionism is a double-edged sword and any attempt at raising trade barriers could harm more than help India when there is reciprocal action. Take into account that the $150 billion IT industry (two-third of it computer software and services exports) is certainly premised on an wide open, non-protectionist global market place,” he added.

Eyes are actually on the federal government now, however, not everyone believes New Delhi would move new laws to greatly help local tech firms.

“The government wants shareholders and foreign companies to come to India and create considerably more jobs and options in the united states. I don’t believe the government would consider any action to hurt foreign firms at all,” Satish Meena, an analyst at Forrester Research organization said.

Officials at Section of Industrial Policy & Promotion weren’t available to comment.

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