Ratan Tata to turn focus on start-ups; seeks level playing field

08 Feb 2017



Having re-established his sway over the boardrooms of Tata Group companies, Ratan Tata will return to the startups in which he has invested from 23 February.

On Tuesday, as a precursor to his return, he said the country should remain an open market but regulations were necessary to curb unfair competition.

Tata Consultancy Services chief executive officer N Chandrasekaran will take over as the chairman of Tata Sons on 21 February.

Tata has invested in 20 startups, including Urban Ladder, Ola, MadRat Games, NestAway and Snapdeal.

Responding to a query on protectionism and capital dumping on Tuesday, he said, ''The regulators need to focus on areas where there is unfair competition killing newer start-ups. It needs to ensure that there is enough latitude and playing field that everyone has a chance.''

Tata was speaking in Bengaluru at an event organised by the start-up Kalaari Capital, where he is an advisor.

Kalaari Capital founder Vani Koli, who posed the question, has been one of the first venture capitalists to call on the government to protect Indian start-ups from global competition. In a recent blog post, she accused global taxi aggregator Uber and online marketplace Amazon of dumping capital in India to capture market share unethically.

Kola's views resonate with that of two of the most successful start-up founders Bhavish Aggarwal of Ola and Sachin Bansal of Flipkart. The duo had, in December, made a public appeal to the government to accept foreign capital but say no to foreign companies. This has kicked off a debate in the domestic start-up ecosystem, with clear and opposing camps slowly emerging.

This is the environment in which Tata will re-enter.

On Monday, Chandrasekaran's predecessor, Cyrus Mistry, was removed as director of Tata Sons, the unlisted holding company of $103-billion group, at an extraordinary general meeting. He had been ousted as Tata Sons chairman on 24 October, resulting in a series of skirmishes between his camp and that of Tata in the boardrooms of the different group companies. During this period, Tata had suspended his involvement in the start-ups.

He said he is dying to get back and has a few ideas of how the market should be regulated.

''There seems to be this feeling that 'liberalise for me, but not others'. 'Protect me, but let other have a level playing field','' said Tata on Tuesday. ''That's the dictum of yesterday.''

He also said, ''I think unfair competition by some corporations needs to be controlled. The internet has opened a highway for commerce which is being used by this start-up community and is also being used by traditional companies when it suits them.''

Kalaari counts Ola, Myntra (which was acquired by Flipkart) and Snapdeal as its portfolio firms, in which it has stake. The three companies, among the largest new-age internet firms the country has produced, have all come under attack from global e-commerce giants. Amazon that has committed to invest $5 billion in the country and Uber said it will invest a substantial portion of $3.5 billion it raised from Saudi Arabia's Public Investment Fund.

Flipkart, Ola and Snapdeal are struggling to raise fresh funds at valuations higher than their previous rounds. Investor confidence is seen as eroding, forcing these companies to push for turning profitable that is playing into the favour of Amazon and Uber as they continue to undercut costs to grow their market shares in India.

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