Flipkart, Ola seek level field for start-ups

08 Dec 2016


India needs to create a level-playing field for start-ups to survive the onslaught of cash-rich global companies initiating price wars to stymie the growth of rivals, Sachin Bansal, co-founder Flipkart Ltd, and Bhavish Aggarwal, co-founder Ola Cabs, said.

For Flipkart and Ola Cabs (run by ANI Technologies Pvt Ltd), the market is defined by the amount of capital that can be invested as the money power on the multinationals blunts the technology edge of the start-ups.

Bansal and Aggarwal, the two poster boys of Indian e-commerce, want a fair battle where innovation and technology and not just money power play the most important part in businesses.

''There's a fair way to compete and there's a non-fair way to compete. What's happening broadly in the consumer Internet sector in India today is there's a narrative of innovation that the American companies or the non-Indian companies espouse, but even though products are largely similar, the real fight is on the capital side. The markets are being distorted by capital,'' said Aggarwal, speaking at a panel discussion at the Global Tech Summit in Bengaluru being held by Carnegie India.

The CEOs of both Flipkart and Ola, locked in fierce battles for market share with the Indian outfits of US firms Amazon Inc and Uber Inc, said they don't want the government to bar foreign internet companies like China did but evolve investment policies that suit the country's long-term interests.

The Indian start-ups cannot in any way counter cash-rich Chinese and US consumer Internet firms in offering deep discounts to promote sales. There should be an end to promotional sales and start-ups cannot stretch it beyond a limit. Innovation has no role in price wars.

''When a ride goes to Uber, the high end jobs are being created in the US, not in India. What we need to do is what at some level China did. They told the world that we need your capital but we don't need your companies,'' Bansal warned.

However, others like Anand Rangarajan, engineering director and Bengaluru site lead at Google, were of the view that it was the product that determined success and not the country of origin.

Navneet Kapoor, president and managing director, at Target India, the India arm of the US-based retailer Target, meanwhile sought level playing field for foreign internet companies, saying, ''Innovation can't be held by boundaries, and borders and visas.''

But, with most internet companies living on foreign capital, many questioned the definition of a company being truly Indian.

Uber, which had to sell its business to local rival Didi Chuxing in China, now faces a tough fight in India. The San Francisco-based firm that originated the online cab hailing service will be desperate after the China sale.

Although Uber has been in India only for over three years, its market share has grown from 13 per cent in 2014 to 30 per cent in 2016 and holds second spot in the organised cab hailing market, according to Counterpoint research.

Local player Ola, which launched before Uber, leads with a near 50-per cent market share.

While both Flipkart and Ola are ahead of their global rivals right now, Amazon and Uber have claimed otherwise and been able to gain significant market share even after they entered the market late.

The American companies also claimed that their dominance could impact the creation of high-value jobs in India.

For both Amazon and Uber, India has become a must win market after they lost out to Alibaba and Didi Chuxing, respectively, in China.

Flipkart and Ola are important in determining investor sentiment for Indian startups as the two companies have raised a combined $4.4 billion, and their valuation will likely take a further hit if they lose their top standings.

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