Democracy, Demography, Disruption, Disintermediation, Distribution

Democracy, Demography, Disruption, Disintermediation, Distribution

Last week, as I mentioned in my last post, India celebrated its 70th year of independence. What I didn’t do was put into perspective what it might take for India to achieve its potential over the next 70 years. To understand this we must first consider the past and where India was at the time of independence. The economy was not in a good place and there was of course civil unrest. For the world’s biggest democracy, and now the fastest growing large economy, the rebuilding process has been a good one. However, considering the potential India now harnesses, the future is seen to hold more promise than the past. The Modi administration believe the 5Ds is what it will take to achieve their vision for India – Democracy, Demography, Disruption, Disintermediation, and Distribution. What’s certain is India is definitely moving in the right direction!

As we are on the topic of change; the new RBI (Reserve Bank of India) governor appointment has been made. Urjit Patel who was in fact a key member of the Raghuram Rajan’s staff is the chosen one. I believe this is a positive move as it means the groundwork put into place by Rajan will hopefully be continued by Patel and, in my opinion, given how India has progressed in the last 3 years this surely is the next best option to Rajan staying on. By the way, Patel’s CV isn’t too shabby either.

Moving onto the ever strengthening start up ecosystem, the government owned Oil and Natural Gas Corporation have this week announced a $15 million fund to invest in oil and gas start ups. I believe this shows the government’s continued support and faith in start ups. A start up, this time in the technology sector, last week joined the unicorn club. Hike is India’s answer to WhatsApp. I always talk about India having its own unique problems and challenges that will inevitably require equally unique solutions. Hike has proven that providing home-grown solutions to domestic problems can pay big dividends in a country like India. Of course, other examples of start ups that have made it big include Snapdeal and Flipkart. Commonly, when these two businesses are spoken about it’s due to the fierce competition between them. That’s why the rumour of a potential merger seems all the more unlikely but if it were to transpire there finally may be a real competitor to Amazon, in India, in the long term. On the subject of M&A within the e-commerce/internet segment; it is always interesting to see what the goings-on looks like. In my opinion, what is most interesting, and important, is that M&A is likely being driven against the backdrop of tightened funding with a larger focus on the unit economics and profitability. I’m sure most will agree this definitely trumps large burn on the basis of discounting business models.

Walmart was in the news last week as they acquired Jet.com for $3.3 billion. If the rumours are true, it seems, they are keen to continue their buy versus build approach to gaining market share. According to some, the premise of this approach is to take on Amazon. India is well documented as being Amazon’s primary focus outside of the U.S. Add to that the fact that China is such a difficult nut to crack, the belief is that Walmart might look at Flipkart to take on Amazon in India. Given Flipkart’s recent valuation markdowns maybe it is the right time for such a move – let’s watch this space. To continue on the buy versus build thread – for firms across the globe, this reads like a reasonably strong argument that buy may win which in the end may ultimately benefit the every growing technology eco-system. Given the globalisation of technology as well as the scalability it offers, the eight essential technologies cited in the article are likely to become more and more mainstream; potentially resulting in more businesses being started to address gaps in markets like India.


Author: Dishang Pateldish-colour