NEW DELHI: It has been three months since the domestic unicorns like Flipkart and Ola urged the Indian government to protect them against the onslaught of foreign competition and capital. However, a key government functionary says beyond merely calling for protection against foreign-origin rivals, the startups have not been able to put forward any specific demand. Department of Industrial Policy and Promotions (DIPP), the nodal agency for startups, has shown its willingness to help the Indian startups but says the path has to be shown by those seeking protection. In early December last year Flipkart, Executive Chairman and cofounder, Sachin Bansal had said, "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."Flipkart, Executive Chairman and cofounder, Sachin Bansal had said, "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." "I wish that those who are advocating for this should tell us exactly what policy measures can help them. These people have also met me, but the problem is they are not being specific. Just citing China's example is not enough," DIPP secretary, Ramesh Abhishek said in an exclusive conversation with ET Digital. However, the Secretary made it clear that the government will not indulge in partisanship in order to help the Indian companies. "We cannot have one set of policies for Indian startups and another for foreign companies. We have to work in a transparent manner. These startups need to tell us exactly what support do they want which is transparent and can be considered by the government," added Abhishek. Industry insiders believe that the inability of Flipkart and Ola to come with concrete measures is because the two unicorns are not in any way at a disadvantage vis-a-vis their foreign competition. "I can see where DIPP is coming from because they need concrete points which have reasonable support and are well-argued. Instead, investors like Kalaari Capital are preparing notes on capital dumping by foreign companies which is untenable. These domestic startups are taking the same capital that the foreign guys are taking. I cannot say they are disadvantaged today because they are both big companies," said an industry expert on the condition of anonymity. It was in December when the founders of the two biggest unicorns in India - Flipkart and Ola - waved the card of nationalism and sought protection in the face of increasing competition from their foreign counterparts. Ola's reticent founder Bhavish Aggarwal had also joined his voice in emphasising that the foreign competition cannot be allowed to win just on the account of their deep pockets. "What's happening in both our industries (is that) there is a narrative of innovation that non-Indian companies espouse but the real fight is on capital, not innovation. The markets are being distorted by capital," Aggarwal had said. In the last three months, since Bansal and Aggarwal had first raised the outcry the competition has only got fiercer. BothAmazon and Uber after losing the war against local competitors in China have doubled their efforts and increased their investment in India. On the other hand, both Flipkart and Ola have been getting bad news in terms of valuation. While Flipkart saw its valuation marked down by Morgan Stanley, Fidelity Investments and most recently, by Optimum Fund, Ola also recently raised fresh funding at a 30% valuation drop. With falling valuation and burgeoning losses, some believe it is not long before both Flipkart and Ola lose out their market supremacy to their rivals. While both Uber and Ola are riding neck and neck in the Indian ride hailing market; Flipkart is still leading the ecommerce market albeit with a diminishing margin. There may be nothing concrete that the government can do to protect the home-grown unicorns and both Ola and Flipkart seem to know it after failing to follow-up on their weak nationalism argument. While there may have been a time when home grown companies battled an immature regulatory framework and often found themselves at the received end of it, the playing field has long been evened out. "There was a point in time when both Ola and Flipkart were disadvantaged. For instance, Uber got regulatory forgiveness for their payment system which Ola never got. Similarly, when marketplaces were not supposed to sell on their own account Amazon was merrily doing that. However, that point is past. As of today, no one can say that Flipkart is getting a worse deal than Amazon," commented the industry expert quoted above. It seems that Ola and Flipkart might have to fight their own battles, backed with a funding as diverse and foreign as Uber and Amazon. The game of consumer internet is already played out. You cannot shut down Amazon after they have already brought in their billions of dollars in the country. No champion of Indian companies would like their competition to win, but the government cannot be expected to decide the winner," says the industry veteran.
Written and published by economictimes.indiatimes.com/
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