In India, American companies dominate the internet. Facebook’s WhatsApp is the most popular app on phones. Virtually every smartphone runs on Google’s Android system. YouTube is the favorite video platform, and Amazon is the No.2 online retailer. For some Indian political leaders, it is as if their nation – which was ruled by Britain for a century until 1947 – is being conquered by colonial powers all over again. But this time they are determined to stop it. “As a country, we have to all grow up and say that, you know, enough of this,” Vinit Goenka, a railroad official who works on technology policy for India’s governing Bharatiya Janata Party, said at a conference in August.
In recent months, regulators and ministers across India’s government have declared their intention of imposing tough new rules on the technology industry. Collectively, the regulations would tighten the free rein that American tech giants have long enjoyed in this country of 1.3 billion people, which is the world’s fastest growing market for new internet users.
The new proposals include European – style limits on what big internet companies can do with users’ personal data, a requirement that tech firms store certain sensitive data about Indians only within the country and restrictions on the ability of foreign – owned e-commerce companies to undercut local businesses on price. The policy changes unfolding in India would be the latest to crimp the power – and profits – of American tech companies and they may well contribute to the fracturing of the global internet.
In May this year, Europe put into effect a sweeping new privacy law that gives Europeans more control over what information is being collected on them. In the United States, the state of California just passed a privacy law that gives residents more protections than Americans at large.
As India sets new rules of the game, it is seeking inspiration from China. Although India does not want to go as far as China, which has fenced its internet off from the global one, officials admire Beijing’s tight control over citizen’s data and the way it has nurtured homegrown internet giants like Alibaba and Baidu by limiting foreign competition. At the same time, regulators do not want to push out the American internet services that hundreds of millions of Indians depend on.
For Google, Facebook, Amazon and others, India’s moves would narrow a lucrative business avenue. After many of them were blocked in China, India had become the companies’ next frontier for growth. Salman Waris, an expert in international technology law at TechLegis in New Delhi, said India was trying to establish strong data protections for its citizens, as Europe did, while giving the government the right to obtain private information as it sees fit, much as China does. Foreign tech companies will have little choice but to go along. “Everyone is going to fall in line and do what is necessary,” Mr. Waris said. “These companies have to do it in China and Europe, and they will do it here.” India’s new policies are still a work in progress, with competing government agencies jousting with foreign and domestic lobbyists and policy advocates to shape them. But new restrictions are definitely coming, said officials and industry executives involved in the process. The country’s Supreme Court declared last summer that Indians have a right to privacy and pushed Parliament to pass a data privacy law. Prime Minister Narendra Modi and his B.J.P party have embraced an India-first economic nationalism to address weak job growth before elections next year. The law enforcement authorities are also demanding more legal tools to extract private customer data from WhatsApp, Facebook and financial firms.
“We don’t want to build walls, but at the same time, we explicitly recognize and appreciate that data is a strategic asset,” said Aruna Sundararajan, the nation’s secretary of telecommunications, who has been deeply involved in the policy discussions.” There is a strong feeling in many quarters that the reason that India has not been able to develop a Tencent or Baidu or Alibaba is because we have not been nuanced in our policies.”
The Indian government, which sees data as vital to a whole new generation of technologies such as artificial intelligence, appears particularly determined to reel in Facebook and its WhatsApp messaging service. Officials were furious after the Cambridge Analytica scandal this year revealed that Facebook had shared private information on 87 million users, including 560,000 Indians, with a political consulting firm that had sought to influence Indian elections.
More recently, the Ministry of Electronics and Information Technology has demanded that WhatsApp create a way to track and stop mass messages, such as a series of false items about child kidnappers that led to the murder of two dozen innocent people by angry mobs.
WhatsApp has refused, saying that building such technology would break the encryption that keeps messages private. The government, for its part, is holding up a new Indian payments service from WhatsApp until it complies with local laws, including a new rule that requires financial data to be stored only in India. Facebook is not the only American company who wants to participate in the huge evolving fintech market in India – so is Warren Buffett.
“India is buzzing right now,” says Mr. Data, the founder and chief executive of Data Xgen Technologies. “We are getting many start-ups, many innovators, creating world class solutions. I think this is a very important area right now and India is at a very good state where innovation is being accepted and being appreciated.” We share the same opinion of Mr. Data, therefore Calvin • Farel with its crowd funding platform and Inventive Venture with its’ MembersClub are planning to start operation in India by end of 2019, beginning of 2020. Given the rapid advancement of India’s technology sector, it comes as little surprise that global investors are keen to get a foothold in the market.
A few days ago, it emerged that Warren Buffett’s Berkshire Hathaway – which has currently a cash pile of more than 100 billion US-Dollar to be invested – had snapped up a stake in Indian digital wallet company Paytm. The companies both confirmed the investment, but did not reveal the size of the stake or financial details of the transaction. The business newspaper “Mint”, citing anonymous sources, pegged the deal at between 300 million US-Dollar and 400 million US-Dollar for a 3 to 4% stake which would give Paytm already a market valuation of around 10 billion US-Dollar.
India, the world’s sixth biggest economy, has long been known for serving the IT back office of companies globally. The country’s tech industry has rapidly evolved and innovation is on the rise, with companies trying to capitalize on the surge in internet use and the role that technology can play in India with hundreds of millions of users.
Solutions around technologies including social media, analytics, artificial intelligence and cloud, in areas ranging from finance to health care, have gathered pace in India and are already contributing to an IT sector worth more than 150 billion US-Dollar last year compared to 74 billion US-Dollar in 2010, according to the India Brand Equity Foundation. In our opinion India is slowly converting from a software development hub of the world into an innovation hub which perfectly matches our business concepts under Calvin • Farel and Inventive Ventures. The expansion of the technology sector is also being driven by the surge in the number of internet users in India, largely boosted by the availability of cheaper smartphones mainly from China and cut-price data costs amid fierce competition between the country’s telecom operators. India currently has about 500 million internet users, according to the Internet and Mobile Association of India and Kantar IMRB.
FinTech has become a major focus of attention in India, as companies and entrepreneurs capitalize on opportunities in the market, particularly following the government’s demonetization move. In 2016 Prime Minister Navendra Modi announced the ban on India’s two highest value banknotes in an effort to reduce black money flows and bring more Indians into the formal economy in a country which is still heavily dependent on cash. Mobile wallet service Paytm, India’s largest digital financial services company – which can be used in India from buying a cup of tea to paying for an Uber ride or the utility bills – has very much been at the forefront of the move towards digital payments.
Another company in the Indian FinTech space is Zeta, which focuses on digital payment solutions for corporations and employees, including ways of managing employee benefits and expenses digitally. Launched in 2015, it now has a user base of 1.4 million. In our opinion there is already a huge amount of opportunities in the Indian market, but we certainly think true innovation is yet to come. What we really see as a huge plus point is that India has one of the largest English – speaking populations and at the same time an open market compared to China and because of these factors it represents on enormous opportunity to our business concepts. India has turned into the third – largest start-up ecosystem in the world, with more than 1,000 tech start-ups added last year alone, according to India IT trade association Nasscom.
We at Calvin • Farel and Inventive Ventures see a trend in India where millennial’s are enthusiastic about developing technology and this is the reason why India is producing a lot of skilled professionals we are highly interested in not only for the MembersClub, also for the business concepts under Inventive Ventures. For Calvin • Farel’s crowdfunding platform the number of indigenous start-ups mushrooming in the country is also encouraging. At the same time such opportunities mean that more talent is returning to India or remaining in the country. All of this comes at a time when India’s IT sector faces challenges in the United States given Donald Trump’s efforts to keep more jobs within the country by threatening to clamp down on the HIB visas that many Indian IT professionals depend on to work in the US.
Just a decade ago, tech graduates aspired to go abroad for work, but that seems to be changing. Now people in India want their children to stay because there are more work opportunities arising for them. Experts already point out that India’s education system needs to keep up with the rapidly evolving sector. For all the above mentioned reasons Calvin • Farel and Inventive Venture are convinced that their business concepts fit perfectly in such an environment, especially the crowdfunding platform as well as the MembersClub, as a lot of the start-ups which are run in India by young engineers who are not necessarily looking for secure jobs but they want to do something cool.
More broadly, the Indian government says it wants to ensure that Indian and foreign companies have to follow the same rules on taxes, data storage, security and pricing as well as cooperation of law enforcement. The big American technology companies are trying to fend off or dilute the regulations behind closed doors. Many consider the topic so sensitive that they refused to discuss it on the record.
