Indian start-ups have so far worked in silos, driven by competition and a need to maintain secrecy. Even though many of them raised massive funds from venture capital and private equity firms, Indian start-ups still lack a powerful voice. At the same time, their global rivals such as Amazon and Uber are investing billions of dollars to conquer the Indian market.
Unlike traditional businesses — where a local upstart can provide stiff competition to multinational firms, network effect plays a crucial role in the digital world. The company with larger number of users and providers gets a disproportionate share in the market and the runner-up has to settle as a distant second.
For example, Uber, the first mover with higher number of users dominates the US taxi aggregation market while Lyft, its competitor, is struggling. Similarly, Uber lost in China to local rival Didi Chuxing, which was dominant in the country.
Indian new-age firms have often sought “level-playing field” from the government. They cite examples of concessions given to Apple and IKEA in local sourcing, which puts Indian players at a disadvantage, when compared with how China has groomed local players.
don’t do a good job of lobbying. We are conditioned to think that we do our job, the government will do its thing for us,” said Ashish Goel, co-founder and CEO of Urban Ladder in a recent interview. For its competitor, IKEA, the government has relaxed the 30 per cent mandatory local sourcing norms for five years. Since it’s inevitable that more foreign brands will enter the market, Goel said the government should nurture local businesses while welcoming multinationals.
Uber, which has raised $12.9 billion in equity, has far more spending power than Ola, and the two have engaged in a price war that has resulted in fares being as low as Rs 6 per kilometre.
Sources close to the emerging group said, while multinationals might have more capital, technology can balance the odds in the new economy.
“Innovation requires some capital, but taking market share from one to another requires more capital. We are the only ones innovating and continue to innovate,” said Binny Bansal, co-founder and CEO of Flipkart in a September interview with Business Standard. Bansal added that it was Flipkart who had grown the market with innovations such as cash-on-delivery, while rival Amazon was burning money to grab a pie of the market.
According to local start-ups, only if government ensures a level-playing field can India have its own versions of Alibaba and Tencent in the years to come.
iSPIRT, a think-tank which promotes local technology product firms, says multinational firms in India get more regulatory forgiveness than domestic start-ups. “iSPIRT is a think tank, which is different from a trade-body which works for its members. We believe that an explicit level-playing field policy is essential for India to remain an open market. This level-playing policy must ensure that incumbents and challengers are treated equally on one-side, and MNCs and domestic start-ups are equal on the other side,” said Sharad Sharma, co-founder of iSPIRT.
UNION OF UNICORNS
Flipkart co-founder Sachin Bansal is putting together a lobby group of Indian entrepreneurs
The group will be formally announced at a technology event slated to be held on December 6-7
Bhavish Aggarwal, Shashank ND, Girish Mathrubootham and Vijay Shekhar Sharma to be other prominent members
The group will seek a level-playing field with MNCs like Amazon and Uber