Make in ‘digital’ India

The Asian Age, June 01, 2015

By Pradeep S Mehta
Snapdeal, Flipkart, Ola Cabs, Zomato and Hike are good for the economy as well as for consumers.. currently generating over 70,000 jobs. In the next five years, this could grow to a quarter million jobs.. which means more choices and lower prices

In the midst of the debate on allowing foreign direct investment in retail and in e-commerce, it would be worthwhile recalling what Christine Lagarde, the International Monetary Fund chief, early this year said to a group of students at Delhi’s Lady Shri Ram College, “Yes, I would personally invest in India.” As it turns out, Ms Lagarde is not alone. Year on year investments in Indian tech startups are growing at exponential rates, and our startups have raised close to $3 billion, and that too in the last five years.

With new, vibrant tech hubs popping up around cities like Delhi and Bengaluru, it’s not surprising that investors are optimistic. India currently boasts over 3,100 startups, 800 of which were generated in 2014 alone. We have quickly grown to be the fourth largest start-up nation in the world. If we can keep this pace, we can expect to see more than 11,500 Indian startups by 2020.

The rapid rise of so many new tech companies shows that this is a dynamic and fast moving space. New businesses are emerging and thriving all the time because the barriers to entry are very low. For example, take the e-commerce platform Snapdeal. Founded in New Delhi just five years ago, Snapdeal already has 20 million registered users and offers over four million products from over 100,000 retailers.

Snapdeal’s rise follows on the heels of India’s largest e-commerce platform, Flipkart. The eight-year-old company ships eight million packages per month to its 45 million registered users across 1,000 cities and towns. In fact, Flipkart, today, is worth an estimated $15 billion, making it the third most valuable privately-held start-up in the world after Snapchat and Palantir Technologies, according to a recent analysis by the Wall Street Journal/VentureSource.

But e-commerce isn’t the only tech sector in India booming with home-grown startups. The cashless autorickshaw and taxi-hailing service, Ola Cabs, is another standout success. Launched just last year, Ola started in 10 cities and today offers 100,000 vehicles in 67 cities, and at low fares. Already surging ahead of Uber and its presence in 11 cities, Ola recently acquired India’s second-largest cab hiring startup, TaxiForSure. The merger has expanded the combined reach of the companies to 127 cities and moved Ola closer to its goal of 200 cities by the end of 2015.

Other Indian startups are also seeking to challenge global players. When it comes to restaurant discovery, Zomato is a rival of Yelp. Over the past seven years, Zomato has not only become India’s number one online and mobile restaurant finder, it has also amassed more than one million restaurant listings in 500 cities across 22 countries, with over 80 million monthly visits on average. In 2014 alone, Zomato acquired seven firms, including US-based Urbanspoon. More recently, Zomato began offering online food ordering in Delhi and the National Capital Region.

The messaging-app Hike is also growing quickly. Founded in 2012, Hike already has 35 million users, 90 per cent of which use the service in India. Since acquiring Zip Phone earlier this year, Hike has beaten Facebook’s WhatsApp to the punch and is the first messaging app to rollout a voice-calling feature.

This wave of new entrants like Snapdeal, Flipkart, Ola Cabs, Zomato and Hike is good for the economy as well as for consumers. India’s tech startups currently generate over 70,000 jobs. If we can keep this up over the next five years, this number could grow to over a quarter of a million jobs. And with so many new players entering the market, we can expect to see greater competition between companies. This means more choices and lower prices for consumers.

But most importantly, this growth is only possible if we can maintain a clear path forward for our businesses. We must continue to give our skilled and aspiring entrepreneurs room to keep creating better products for consumers. Regulatory roadblocks can have a chilling effect on the ability of our businesses to innovate, compete and attract new investment. In such a new and dynamic space, regulators should watch and wait for proof of real consumer harm before taking action.

Underpinned by Prime Minister Narendra Modi’s vision of a Digital India, the digital economy offers immense potential for India’s businesses and consumers. The point is well made in an open letter to Mr Modi drafted by the team at, with its several members from startups. The letter reads, “The Internet is a fountain of creativity because it is a single, global market where anyone can offer a product and be reachable by every user”. With innovation, exchange of ideas and competition visible in the Indian technology market, Indian regulators must ensure that prohibitive policy frameworks do not hurt the still nascent industry in India. Ms Lagarde’s praise is confirmation of the opportunities ahead, but it is ultimately up to policymakers to ensure that India’s entrepreneurs can continue to succeed unimpeded.

The writer is secretary-general, CUTS International

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