Japanese internet and telecom giant SoftBank Group has joined the Indian industry body Indiatech.org that aims to represent local ventures seeking protection from resourceful global rivals.
Confirming the development to VCCircle, a SoftBank spokesperson said it is one of the many venture capital investors extending their support to the group which is spearheaded by Flipkart, Ola, and MakeMyTrip.
“SoftBank is one of the several other investors including Matrix and Kalaari and Indian internet businesses such as Ola, Flipkart and Hike who are supporting Indiatech. Our intent is to work with the government to support the development of the rapidly evolving internet ecosystem in the country and we hope the organisation would facilitate this,” the spokesperson said in an email response.
SoftBank is an active investor in the Indian internet space owning substantial stakes in a slew of companies such as Flipkart, Ola, Paytm, Snapdeal, Oyo Rooms, Housing, Grofers and InMobi.
It should be noted that two of SoftBank’s biggest India bets – Flipkart and Ola – are battling against US-based tech giants Amazon and Uber.
The Times of India, which first reported the development, said the Tokyo-based conglomerate will offer the lobby group financial and strategic assistance.
Indiatech was formed last month with Flipkart’s Sachin Bansal being the founding president and chairman of the group. Online classifieds platform Quikr and Airtel scion Kavin Bharti Mittal’s Hike are the other founding members of the association.
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 convince the government that homegrown companies should dominate the local internet market.
Besides its core functionality of lobbying for favourable policy outcomes against foreign competition, the group will help startups in the ecosystem with job creation and skills training to scale up internet businesses.
In addition, a number of other global and Indian investment groups such New York-based Tiger Global Management, Hong Kong-based hedge fund Steadview Capital and Accel India have been invited to join the group.
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.
Bansal said 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 it.
“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 that 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 Medium.com, she extended support to Indian entrepreneurs in their fight against foreign-origin rivals. “The first experience of well-executed ecommerce 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.