Big Tech companies should list on Indian bourses to spur wealth creation in the country

Should Big Tech in India be regulated? While the question has been doing the rounds for a few years, it has become more pertinent today given the spike in allegations of monopolistic practices by Western tech behemoths.

Big Tech companies, comprising Amazon, Apple, Google, Facebook, and Microsoft, dominate online search, advertising, social networking, and shopping, and are subsequently said to pose a threat to the Indian tech startup ecosystem by putting consumers’ data at risk, and raising issues of privacy, and national security.

Industry experts, who spoke at the Asia PE-VC Summit 2020 last week, felt that while Big Tech needs to be regulated to support, hold, and groom the growth of homegrown startups and the tech ecosystem, the interest of consumers must also be protected. Moreover, to ensure a level playing field, Big Tech should look at listing on Indian bourses going ahead.

Focus on technology, wealth creation

“The country should be ruled by the rule of law, and we are currently short on laws. Firstly, there should be regulation. Second, there should be a regulator. Third would be occasional sporadic, bureaucratic, or political action. I would say the third one is the least recommended, as you definitely don’t encourage knee-jerk reactions by the government. I hope that adhoc actions are just a precursor to regulations and a regulator,” said Anand Lunia, founding partner, India Quotient at the summit organised by DealStreetAsia.

Lunia highlighted that technology in India is not developing, and that the country is not really focusing on capturing wealth creation.

“All these big companies are listed in the US. So wealth creation is only for American shareholders. Today, a global company neither pays an import duty nor GST, which is amazing. We have a free pass. If we insist that these companies list on the Indian bourses, we will have both technology and wealth creation. Then the fight is fair because Indian capital will pick between Indian entrepreneurs and Amazon,” he said in the panel discussion titled ‘Should India regulate Big Tech to grow its local startup/tech ecosystem?’ at the summit.

According to Lunia, the Unified Payments Interface (UPI), which is an Indian invention, has been designed to be handed over to players who are not even listed in India. “It has been kept free for the benefit of global players. Wealth creation because of UPI will be happening on the American bourses. Forget regulation, let’s first have the ability to regulate.”

Rajesh Sawhney, founder & CEO, GSF Accelerator, who was also on the panel, was of the view that the need of the hour was to create more choices. He felt that the role of the regulator should be to create enough competition and give consumers more choices.

“Think about how manipulative a platform like Google can be if a billion people can only download apps through Google Play Store? There’s no choice. There is no competition…Look at China’s operating philosophy, ‘what is mine is mine, what is yours is negotiable or also mine’. So they have created an iron curtain around their digital economy.”

Citing the example of TikTok, Sawhney said that the platform has broken the earlier myth that only the West was capable of creating global technology platforms, and that it has given hope to people in Indonesia and people in India of building similar platforms.

“Why do we only need to build SaaS companies? Why cannot ShareChat be the voice of the world. It’s about belief,” he opined.

On the contrary, Lunia was of the view that the national interest should be put above the consumer interest, and that Big Tech should look at developing technology in India itself.

“If you look at the history of Indian Oil, the biggest drag on the Indian economy today is dependence on imported oil. A large part of our trade deficit today is because of oil imports. If data is the new oil, where does our national interest lie? Does it lie in the consumer benefit by providing them free services, or does it lie in becoming independent? If we wanted energy independence, we also want data independence.”

Citing the example of Amazon’s discounting strategy, Lunia said, “A non-Indian company imports technology into India, and grabs land by heavy discounting…and we are celebrating. I have spoken to engineers, who joined Google India. They say it’s a sales company. Every time we see jobs created, they are call centre jobs. Google doesn’t develop technology in India neither does Amazon nor Facebook. If Google starts developing a product here, I, as a VC, in the long run will also develop.”

Experts also pointed out that India has not been able to make money from the Big Tech in India. So there is no money available to redirect back into a startup.

“India is the second-largest market after Silicon Valley in the world. But how many ex- Google and ex-Facebook employees have established startups in India? The answer is near zero,” Lunia said.

Perfect storm time in India

“It’s a perfect storm time in India. We didn’t have enough people who thought about how products are built, enough understanding of how AI, and this kind of pervasive cloud infrastructure available 10 years ago. Thanks to Amazon and thanks to Google, they have done some good work as well. All of this has come together with talent and money. If we play the game right, trillions of dollar of wealth are in front of us 10 years from now,” Sawhney said.

On the impact of regulating Chinese capital inflow into India, and its impact on the Indian startup ecosystem, Sawhney said startups need the money and that is indisputable. India doesn’t have enough domestic capital or enough positively inclined domestic capital. Innovation doesn’t strive in a vacuum.

“Most foreigners are now saying that we don’t want to go to China because of the domestic funds there are very strong. We’re not at that stage. So, we should welcome all capital if it comes without colour. Capital wants mobility, it wants transparent taxation rules. I think there’s a lot of work that needs to be done by the Indian state to make India a more capital-seeking country,” he added.

More than 50 per cent or more of our economy in the next 10-20 years will be digital, Sawhney noted. The core economy today is about mobile phones, 5G, cloud technologies, and artificial intelligence. It’s about all of that where India is losing its competitive edge. “Inevitably, we will have to create our national champions. We created Infosys, we created TCS, but we just cannot stay there.”

Lunia concluded, in general, having a judiciary and an ombudsman for technology competitive issues will in itself be a big help. “Welcome global companies, tell them, bring your capital, do development here. If you import technology, there will be huge tax. Point is, we don’t want them to come and create chaebols here.”

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.