Aim to aid local startups but not looking at protectionism: IndiaTech CEO Kailasam
The debate around a ‘level-playing field’ for Indian startups intensified towards the end of 2016 when Flipkart co-founder Sachin Bansal and Ola co-founder Bhavish Aggarwal lashed out against “capital-dumping” practices of their foreign rivals. In September last year, a few prominent entrepreneurs came together to launch IndiaTech.org as they felt the need for a lobby group to protect their interests.
IndiaTech’s members include internet companies Makemytrip, Ola and Hike as well as venture capital investors SoftBank, IDG Ventures, Kalaari Capital and Matrix Partners. Flipkart, however, is not its member after US-based Walmart Inc. acquired the online retailer. This raises doubts whether the organisation has lost track. IndiaTech also seems to be struggling for an idea to fight for.
Last month, former IBM and Oracle executive Rameesh Kailasam took over as IndiaTech’s CEO to fill the vacancy caused by the resignation of Gyanendra Badgaiyan in April. In a telephonic interview with TechCircle, Kailasam talks about the way forward for IndiaTech, where it stands on important issues such as the draft e-commerce policy and more. Edited excerpts:
What is the organisation’s mandate?
We are formalising membership and the composition of the members. Based on the issues they raise, we will finalise the long-term objectives of the organisation. Our vision is to build a vibrant homegrown ecosystem by giving a level-playing field for entrepreneurs, thereby fulfilling the idea under the government's Startup India programme.
What do you think of capital dumping?
It has a different connotation on the ground. It is about the lack of a level-playing field with an increased amount of investment coming in. Companies might resort to discounting; all companies have done so at various points of time. We have the Competition Commission of India for that in case of abuse of that position.
There has been a view that overseas companies have an advantage because of tax advantages or compliance implications. It has resulted in the erosion of capital by manipulating the market. Therefore, there would be a perception among VCs that their money might be used for discounting instead of product development. People have perspectives so that there is no abuse of position.
Is it not what a SoftBank-funded startup also doing to its competitors? SoftBank is a member of your organisation.
My question is that is it always the case that all money coming in is meant for that purpose only. When you run a company, you are looking to grow and run the business. You are not there to survive and burn because some other person is discounting more deeply. What I meant here is that none of the VCs would like their funding to go for burning. The ideal scenario is money should be used for product development. We have a great talent pool and local entrepreneurs and we should not lose the opportunity to create a vibrant ecosystem by helping Indian-founded and Indian-run companies.
Hypothetically speaking, will you get caught in the crossfire between, let us say, Swiggy and Zomato with the less-funded company having an issue with capital dumping?
Our idea is that policies should provide a level-playing field. We will not get into the transactional issue as you mentioned. We are not meant to work like that. It is early days for me to comment on any specific case.
Why have some venture capital firms supported IndiaTech?
We will work to enable a successful internet e-commerce ecosystem in India. Many VC firms also feel in a similar way. The US and China have a large number of internet startups and we are the world's third-largest country for these businesses. So the idea is to create the next largest bloc that does well and prosper. We are not looking at anything protectionist. The laws should apply to everyone equally. We don’t want startups to suffer because of any undue advantage.
Do you plan to work closely with other IT industry bodies like Nasscom and iSPIRT?
Where there are areas of commonalities, we will collaborate with everyone, which is in the larger interests of the industry. If someone else is taking up an area, we will leave it and support them in that direction.
Flipkart was one of the key votaries of the organisation and now it is not part of IndiaTech. Is it because of the Walmart acquisition? Can it come on board according to your agenda now? Are you speaking to Flipkart or to Snapdeal?
There were no formal members till I came on board. We are at various stages of discussion with various potential member companies. You won't find Flipkart as of now. We are still deliberating on the exact composition of the membership.
Wherever we see a commonality of purpose and direction, we will get those members. Our idea is to foster homegrown startups and entrepreneurs in India. Anyone who subscribes to the overall vision, I don’t see a conflict there. A few companies can fit in despite being acquired.
Would you restrict yourself to internet and online companies? Is it only for business-to-consumer companies? Will you include software-as-a-service companies?
We are starting with this. It is still an evolution stage.
Could you share your views on the draft e-commerce policy?
We are welcoming the policy. The entire retail sector in India itself doesn’t have a parent ministry or policy body. The physical and digital retail sectors had issues. The policy is not yet in the public domain in full. Certain aspects have to be clarified, especially how it is going to be implemented. We will be happy to contribute towards the final policy. You cannot have one-size-fits-all policy.
Do you have a stand on the data localisation requirements? Digital payment startups have struggled with RBI norms.
We have not formally taken a stand on this. We are still consulting with the members. However, data localisation is a dreadful term. The reason is that a global company would not want to set up 100 servers in 100 countries. It does not make sense.
However, large countries and markets have concerns about security and privacy and they might like some data to be stored locally. Non-existence of local servers has given a huge advantage to many firms because they are not incurring the cost of compliance within a particular country. This not only applies to Indian entrepreneurs but to foreign companies which are operating in India. You look at it from the context and not in a generalised manner.
Again, what the RBI asked for was mirroring of data and the transaction data to be stored here. Law enforcement agencies might ask for data and the data needs to be provided as per licensing norms. Hence, mirroring was necessary.