When do we as human beings start separating ourselves from others? When does a feeling of ‘us versus they’ start to emerge? When do people or nations become jingoistic or to use a civil term - ‘nationalistic’?
Often, this emotion is enticed by a few when a group fears a threat for survival, especially from an outside force.
Over centuries, the idea of a ‘Nation’ is thus sown by a few into the minds of masses, to protect territories in times of aggression or to catapult themselves to power.
It’s the same emotion of fear and protectionism that a few entrepreneurs wish to sow to gain a protectionist regimen favourable to them in India.
According to a report, India’s unicorn entrepreneurs Sachin Bansal and Bhavish Aggarwal plan to start a lobby group next month. (Read full report)
Now let’s see how the ‘us versus they’ emotion propagates itself to give birth to unnatural markets. This is what Scottish philosopher and author of ‘Wealth of Nations’ - Adam Smith, said:
“In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest. The proposition is so very manifest that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question had not the interested sophistry of merchants and manufacturers confounded the common sense of mankind. Their interest is, in this respect, directly opposite to that of the great body of the people.”
Ask any common man in India’s urban cities – whether the rise of Uber or Ola has not brought taxi prices down? Whether an Oyo Rooms or GoStays not made average room rentals in hotels cheaper from where they were in 2010? Whether the Indian consumer has benefitted from a price war amongst telecom giants - Airtel, Vodafone and now Reliance Jio?
In any nation, lobby groups who seek a protectionist regimen are directly opposed to the interest of the great body of people.
Artificially obstructing the entry of multi-nationals or even domestic players by law, not only destroys fair trade practices, creates distorted monopolies but also harms the average consumer.
Imagine a scenario where you can book hotels from only one company, buy from just one portal, or use just one social network. Where you are forced to use a MakeMyTrip and avoid an Airbnb, you can’t buy an Apple iPhone, have to do with a Micromax and a Hike messenger being preferred over Whatsapp.
How protectionism hurts entrepreneurship
In the internet world, which is still emerging in developing nations, smaller investors avoid entry into a sector already dominated by a large investor for fear of cannibalistic pricing.
Thus, a domination by a single player due to favourable laws, can severely harm competition and create an unbalanced market. The domination of Ola and Uber in taxi app market is a clear example.
Protectionism will only make matters worse. A small town entrepreneur who wants to compete with a domestic giant would cow under pressure.
Billions of dollars have been raised from foreign investors by Indian startups such as Flipkart, Ola, Snapdeal, Quikr, Paytm, in the past.
The buckets of foreign capital are open to any entrepreneur who can show his or her mettle - be it Indian or not.
It’s pertinent to question whether the making of another lobby group to wine and dine with lawmakers in ballrooms of luxury hotels simply means the Indian entrepreneurs have lost the mojo to compete against the multi-nationals on the battlefield.
It has occurred in the past too, four years ago, when online firms started to disrupt sectors, neighbourhood shops which sold books, kirana, electronics raised the same sentiment through retailer associations.
Taxi firms such as Meru, Mega and WTi Cabs of the world, also echoed the same clamour, even as Uber and Ola decided to roll out services caring a hoot about regulations. It did make the services cheaper and quality better.
"We are Indian, they’re not"
Recently, I received a call during the Diwali sales this year. The pitch by one Indian e-commerce player was that it should get more support from government and media as it is Indian.
My simple question to the person - was - that whether a consumer cares if that Sony Bravia 32 inch LED television is being sold by an Indian or an American online retailer? Or whether a consumer cares for competitive pricing, better quality and faster delivery of a product than ‘national affiliations of the online retailer’.
Whether it matters to her if she buys an Apple iPhone from an Indian or an American online store. Or whether it matters to her if the cab company she is travelling is registered in India or in the Netherlands.
Have talked to numerous drivers who were working in ‘Indian’ companies such as Eco-Rent-A-Car, Meru Cabs, Mega Cabs and others. After the arrival of the taxi apps, which provide more incentives, many drivers have said goodbye to their Indian employers and become semi-entrepreneurs.
My other question to that person was whether the startups are really Indian. As per their domiciles, Flipkart, Grofers and Practo are registered in Singapore while Freshdesk, Druva and Zoho are US-based.
MakeMyTrip and Yatra have chosen to list on foreign bourses than Indian.
Almost all of the Indian Unicorns are owned by either the Chinese, Japanese, Germans or the Americans.
Almost all are yet to turn operationally profitable. It would not be wrong to say that even their employee salaries are being funded through ‘foreign’ money. Indian cricket team’s title sponsorship is also being funded by China.
As startups domicile overseas, their intellectual property also housed overseas.
Conclusion
Since last two years, there is an air of nationalism. Whether that has resulted in clean air for the nation is a matter of debate.
Many startup entrepreneurs have talked about the failures of governments in India to provide clean drinking water, air, uninterrupted power supply, security of self and staff, and an ease of doing business.
Blind nationalism just hides the faults of a nation.
Aamir Khan, former brand ambassador of Snapdeal was a victim to it - when he simply echoed voice against anomalies of our society leaning towards intolerance of ideas and beliefs.
Alibaba and Softbank funded Snapdeal decided not to renew the Bollywood actor’s endorsement contract.
The echo of nationalism by startups has also been heard in Indian courtrooms (Read report). This has happened even as both Ola and Uber have flouted existing Indian laws, with audacity.
All Indian e-commerce players clamoured for opening FDI in online retail earlier in their beginnings. As they grew and acquired scale, their tonality changed. Many asked for selective opening, as they feared a deluge of foreign competition.
Protectionism might make startup founders a bit richer, help them raise a little bit more capital and raise prices in markets as per will.
However, the Indian consumer which benefitted from competition will be at a loss.
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