The ugly head of nationalism has again raised its head. This time a few Indian startup CEOs who started their careers working in American companies such as Amazon and Microsoft are raising their voice.
In an event in Bangalore this week, Sachin Bansal, co-founder of Flipkart said that we should take capital from the foreigners but not accept their companies in India.
"What we need to do is what China did (15 years ago) and tell the world we need your capital, but we don't need your companies,” said Bansal, executive chairman of Flipkart.
Ironically, all the capital invested in Singapore-based Flipkart is either US-based or simply non-Indian funds. The company migrated itself out of India a few years to Singapore. Thus, all the revenues are accounted for in the books of its Singapore based parent.
It's not very dissimilar to an Amazon which has an Indian subsidiary and provides jobs to local citizens. The only difference remaining that the head of the parent company will be born in India, versus someone who is not.
As argued earlier (The rise of nationalism in Indian startups), the Indian consumer will be at a loss when there is lesser competition in the market and local players will rule, ousting all chances of entry of MNCs who can level the artificially jacked up prices.
We have seen that in India's ‘License Raj’ era. It was nightmare to buy simple things such a scooter, a car or even getting a landline telephone installed. One had to get them pre-booked and supply couldn't meet demand.
If there is an India where because of the capital inflow an Indian player creates monopoly and laws prevent entry of foreign players, consumers will be at a big loss.
In FMCG space, companies such as Divya Pharmacy run by Baba Ramdev have long argued that MNCs such as P&G and Nestle sell costly products to the Indian consumer, and do not invest back in the economy. Agreed competition from a Divya Pharmacy may create a dent in the pockets of MNCs. But when a Haridwar-based company run by an ascetic can compete with a P&G, then why can't an IITian run company compete with an Amazon or an Uber.
It's true that killing the domestic competition will be harmful to those working in companies such as Flipkart, Ola, Snapdeal and others. However, there are ways to give fillip to domestic companies than shutting doors to the foreigners. The doors of foreign capital open to all. It's just the mettle of the CEOs and their will to compete with the MNC onslaught that matters.
Ola's Bhavish Aggarwal argued that it's 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’s a very unfair playing field for Indian startups,” he added. Ironically, Ola has been funded by Softbank with millions of dollars, even after Uber entered India.
Ola had a first mover advantage and even with the influx of so much capital by both companies, the former clearly has a local advantage over MNCs as it understands local laws or absence of it better. For the Indian consumer it does not matter whether a cab is an Indian or American. He/she just needs a clean and safe ride at an attractive price.
It is also shocking to see Indian startup entrepreneurs citing Brexit and Donald Trump victory as a sign of things to come and shut doors to the 'outsiders'.
“We need to take a more India-centric approach than trying to become an ideal country based on standards set by the rest,” Bansal said, citing Brexit and Donald Trump's victory in the US presidential election as indicators of similar sentiment overseas.
Challenges only increase human capability and quality of products and services. Globally, a 'Made in India' brand will also be accepted if it can compete on quality. A challenge by the foreigners in their home turf will push them to pull up their socks. India can match on manufacturing with its low cost and skilled manpower. It's just that the government has to create an ecosystem to incentivise manufacturing cities, than shut the doors to MNCs, which only bring better technological know-how and tried and tested models.
As argued earlier, the emotion of nationalism is enticed by a few when a group fears a threat for survival, especially from an outside force. A few leaders just have to create that paranoia amongst masses and lo and behold they start believing it as truth.
Donald Trump understood this fear and capitalised on it with ingenuity. So did the French conservative politician Marine Le Pen and UK politician and Brexit proponent Nigel Farage. Post Brexit, it is the young generation which has lost out as UK rethinks its trade policies with the world, and it may shut doors to many a British, when they wish to pursue careers or carry on trade outside the UK.
If Indian tech entrepreneurs start to toe the right wing line towards nationalism and government agrees towards protectionism, we will be left with a less-richer startup ecosystem.
harsimran.julka@network18online.com(This is an opinion piece. Views expressed are personal.)Also read: What Flipkart’s devaluation mean for e-commerce industry?
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