Large foreign companies banking on India technology adoption

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Some of you may have been wondering why I haven’t mentioned GST in a while. Well, I, like most of India, have been waiting for some more clarity on the implementation but also more transparency on the benefits. It seems the logistics sector will benefit through the optimisation of production and distribution of goods and services, it will also help speed up cargo movement. With a fixed rate, GST is due to have a knock-on effect on Manufacturing companies with smaller warehouses in many locations. According to KPMG Advisory Services, GST could reduce transportation costs by 20-30% and this interview with a Partner at the firm gives some good insights into the same. To give a more holistic view here are 10 benefits of GST. It is of course always good to know what the impact will be for the general populous to better appreciate how ordinary people will be affected. This might be a good way to judge how the country might prosper, especially if there are more reductions in spending than increases – which ultimately must be an aim of the government.

Although GST has got the most airtime given the number of years it has taken to pass into law, the India government has of course been busy implementing other reforms. What’s great to hear is that the NDA (National Democratic Alliance) party led by PM, Narendra Modi, hasn’t turned its back on ideas from previous government and is implementing them systematically. There have been many outwardly marketed campaigns such as ‘Make in India, and ‘Start up, Stand up India’. However, you won’t often hear about initiatives like the one in Maharashtra to help farmers sell directly to consumers. Interestingly, I believe parallels can be drawn with the technology ecosystem as this initiative looks to create more efficiency and transparency whilst cutting out multiple layers of ‘middle-men’. The tech ecosystem is certainly changing day to day habits in India. For instance, more and more Indians are preferring to make cashless transactions with a reported increase of 11 times in three years.

Much of the reforms and affinity to technology of Indians is clearly resonating with large foreign companies. For instance, I think it’s interesting to know that Canon state that India is growing faster than Hong Kong or Germany or Netherlands and despite smartphones offering high quality cameras, the DSLR (digital single-lens reflex) is doing very well. Despite that the smartphone market isn’t seeing signs of abaiting anytime soon given the high demand and consumption. Clearly Samsung are banking on this continued demand as they invest heavily into manufacturing facility in India. Likewise, Xiaomi, the Chinese smartphone maker, is aiming to leverage off its continued success in India to be number one in the country. With one million smartphones sold within the first 18 days of the month they clearly have a strong following to build on. Premium brands like Samsung and Sony are clearly prospering in India with the latter stating their Bravia TVs being one of their strongest parts of their business in the country. They are banking on the ability for consumers to spend high disposable income on their products. By now it has become clear many large technology companies have been making big bets on India. Amazon for example continue to plough a lot of money into India and they have enjoyed much success. AWS (Amazon Web Service) has enjoyed good success as have IBM, Google and Microsoft in the cloud IT sector. Microsoft for instance have stated India has adopted cloud technology faster than any of these behemoths had expected.

This week also saw the announcement of a merger between MakeMyTrip and ibibo which represents the biggest consolidation in the online travel agency (OTA) space in India. The consolidation will also bring together many well known consumer brands in India including redBus and Ryde and Rightstay. This consolidation will also bring several renowned brands under one roof, such as Rightstay (alternate accommodation), GoStays (aggregator of unbranded budget accommodations across India), and Value+ (MakeMyTrip’s own new brand of budget rooms). With an overall $30 billion domestic travel market, the belief is there are likely to be more mergers and acquisitions in the space.

Technology businesses have been making waves across the world for many decades now but Jack Ma, of Alibaba fame, is determined to reinvigorate globalisation. His belief is that replicating Alibaba’s “commerce infrastructure” will help combat the challenge of job creation. To be fair, stats suggest he may have a strong case with a Chinese government study from 2014 determined over 10 million people in the country are directly employed in e-commerce. I wanted to finish by mentioning a potentially significant, and in my opinion, well overdue move by one of the biggest Venture Capital firms in the world, Sequoia. The firm announced the first female investment partner in the firm’s 44 year history in the US. Jess Lee, who sold her fashion e-commerce site Polyvore to Yahoo last year for a reported $200 million, joins on the back of what can only be described as derogatory comments by Chairman Michael Moritz which is one of the reasons this story is getting so much attention.

Author: Dishang Pateldish-colour