Flipkart, Ola, others launch lobby group for Indian e-commerce firms

By Binu Paul

  • 28 Sep 2017

A number of prominent Indian consumer Internet companies, headed by e-commerce firm Flipkart, ride-hailing service Ola, and travel portal MakeMyTrip, are coming together to form an industry body to represent local ventures, seeking protection from resourceful global rivals, a report in a financial daily stated.

Christened, Flipkart’s Sachin Bansal is the founding president and chairman of the group. A former IAS officer will be appointed as chief executive in two to three weeks, The Economic Times reported citing four people aware of the matter. Online classifieds platform Quikr and Airtel scion Kavin Bharti Mittal's Hike are the other founding members of the association.

“The group wants to become the Nasscom for the startup space,” two people mentioned above told the financial daily.

Flipkart, Ola, MakeMyTrip, Quikr and Hike are likely to form the non-profit association's executive committee, which will gradually expand to include more Internet companies.

The primary objective of the association would be to convey to the government that home-grown companies should dominate the local Internet market, the people cited above told ET.

Some global investment groups such as Japan's SoftBank, New York-based Tiger Global Management, Hong Kong-based hedge fund Steadview Capital, Accel India and Matrix Partners India have been invited to join the group.

Besides its core functionality of lobbying for favourable policy outcomes against foreign competition, the group will help startups in the ecosystem with job creation, skills training and resource availability to scale up Internet businesses.

The debate around a ‘level playing field’ for Indian startups began in December last year when Bansal and Ola co-founder Bhavish Aggarwal hit out at foreign-origin firms on their capital-dumping practices.

Bansal reignited the controversial debate again in February this year at the IAMAI India Digital Summit in Delhi when he advocated for ‘selective globalisation’, saying it is something that the US and China already follow. He added that it was a mistake to not think of Internet and technology as a strategic sector and to depend on China and the US to build that.

“Indian companies can and should build products which are world-class and take them globally. Zomato, Practo and Freshdesk are clear examples. We need to figure out how do we create a level playing field so our news, restaurant apps, or anything in the Internet space doesn’t get prematurely killed by a company coming from China,” news agency PTI reported him as saying at the summit earlier this year.

“What we need to do is what China did and tell the world that we need your capital, but we don’t need your companies,” he said.

Ola’s Aggarwal said it is much easier for non-Indian companies to raise capital because they have profitable markets elsewhere. “You might call it capital dumping, predatory pricing or anti-WTO, but it is an unfair playing field for Indian startups,” he argued.

Prominent venture capitalist Vani Kola, founder and managing director of Kalaari Capital, had also joined the controversial debate. In a post on online publishing platform, she extended support to Indian entrepreneurs in their fight against foreign-origin rivals. “The first experience of well-executed e-commerce experience for most Indians came from Snapdeal or Flipkart, and the convenience of hailing a cab from anywhere using an app came from Ola. Amazon and Uber weren’t around when these entrepreneurs were busy converting skeptics into customers,” she stated in the post published in late January this year.

She highlighted the consequences of a lack of regulation against capital dumping practices in the e-commerce industry. She cited the example of China and Europe, whose market value in the Internet sector is $1 trillion and $50 billion, respectively. This is because while China banned companies like Google, Twitter and Facebook, Europe did not, she explained.

Sharad Sharma, co-founder of iSPIRT, a think-tank for new age Indian tech companies, too had argued for the level playing field for Indian Internet companies while making it clear that the organisation does not support protectionism. “iSPIRT’s view is that the role of the government is to create a level-playing field and the market will pick the winner,” he said. “When it comes to regulatory forgiveness, it is easier for an MNC than an Indian company. We need to eliminate such scenarios. That requires a serious government intervention,” Sharma said.

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