Ahead of 'Flipmart', India to Produce Home grown Internet Giants

Recently, we witnessed US retail giant Walmart acquiring a 77% stake in India’s largest ecommerce player, Flipkart. The deal, which is the largest ecommerce M&A transaction in the world, has received mixed responses from various parts of the country. While some call it a huge success for the home-grown Flipkart, others call it another Indian startup who surrendered itself to the gigantic US investors.

With this deal, Indian e-commerce market will now look like an arena in which two American players, Amazon and Walmart, will be fighting and deals, discounts, Flipkart Coupons be a part of it. But despite this, one thing that has been made clear is that India has the potential of creating internet companies which can grab the attention of everyone in the world, and not just Indians.

In recent times, we have seen some home grown companies like Paytm, Jio, Ola, Uber and of course Flipkart making it big and grabbing the attention of global investors. These big ticket investors from US, China, Japan and other developed countries have been providing the required money, but also have been making an active impact on the decision making of the company thereof.

With Indian Internet economy to become as huge as USD 250 billion by 2020, the country has a big opportunity to create companies that dominate the world. Investors are going to be interested in India because the market potential is unmatched and growth rate is staggering. In this golden era of Indian Internet economy, the government and the regulators need to take steps which ensure that companies that take birth in India remain Indian forever, and do not lose their ownership to foreign giants.

Here are some of the steps that can be taken to take the best advantage of this growing internet consumption in India. Have a look.

Firstly, we can set restrictions on how foreign players play in the Indian e-commerce market. We have seen foreign investors coming with big ticket investments, and then providing deep discounts to attract the customers. For instance, around 3 to 4 years ago, Snapdeal and Flipkart used to be the two dominant players in Indian e-commerce industry. While on the other hand, Amazon was just another e-tailer that was present in the market.

However, realizing the potential of the Indian market, Jeff Bezos’s firm kept pulling in more and more money in the country. As a result of the competition, we saw Snapdeal losing out completely. Flipkart has also suffered but somehow maintained its tag of the largest e-commerce player in the country.

Therefore, to avoid such a scenario, we can put some sort of restrictions on those investors who bring foreign capital in the e-commerce market. The players who raise money from Indian market can be treated differently.

Secondly, some incentives for Indian players battling with foreign giants should be rolled out. Foreign companies generally come with economies of scale and hence are in a better position to roll out a new idea or innovation, rather than our indigenous startups.

For instance, the mobile phone market in India has been largely dominated by foreign players, right from the start of handheld devices. However, one company that challenged all the global giants in India was Micromax, which at one time had a larger market share than Samsung. But with the entrance of Chinese players like Xiaomi, Oppo and Lenovo, the company failed to survive and now doesn’t have any substantial share in the market in which it used to be a leader.

If at that time, Micromax would have been supported with additional capital to spend more on R&D and building up scale, the situation could have been different. That is why we need to provide some support to Indian Players who have the potential to do big.

Thirdly, some changes must be introduced in such a way that the ownership or controlling power of a company remains within the hands of founders, despite receiving big ticket investments from foreign players. The intricacies of corporate structure must be put to use to do that.

Clever corporate structures like those used in the US and China, in which despite owning a minority stake, the promoters have the power of decision making should be introduced. We can use a structure in which shares of promoters have higher value than any outsider, which will give the promoters more power.

Lastly, the government should not give up its decision of storing the data of Indian users locally. Privacy is a big issue and it certainly needs to be taken care of. Further, keeping the data in India will need good investments, which is further an advantage for India only. There must be adequate policy measures taken so that the data stays in India and stays protected also.

India is world’s most attractive internet market in the world. Internet users, in large numbers are still not using e-commerce and related services, which gives investors a huge market which is still untapped. With such a huge population and internet consumption increasing at a rapid pace, the investors are surely going to come. India should introduce big and advantageous ideas which make us the dominating player, not the investors.