Is India fast becoming a digital colony?

Is India fast becoming a digital colony?
Mohandas Pai
17 May, 2018

The acquisition of Flipkart by Walmart means that now Indian online retail will be dominated by American companies. This is a pattern we see across India's internet space. Facebook-WhatsApp, Google, Twitter, Amazon, Uber, and Microsoft own India. 

If you consider the success of Flipkart and Ola, these are companies owned by foreigners. Many of our most successful startups are registered outside the country and are not Indian. The data they gather will not remain in India but will go out because the owners own the data. Clearly, India is fast becoming a digital colony. 

From 1991, when the Indian economy opened up, the first wave was IT services companies. These companies are still largely owned by Indians, registered in India, listed in India and are doing very well. The second wave was telecom companies, which are still run mostly by Indians. Vodafone is even exiting India. The third wave was infrastructure, where cronies came and took away bank money and is now classified as non-performing assets, but still owned by Indians.

The fourth wave is digital. There is nothing wrong in foreigners owning a company, but they cannot be allowed to own an entire country or an ecosystem. We are not a small banana republic to allow this.

The reasons for becoming a digital colony are many—large Indian investors and Indian capitalists do not put money in startups. They wait and watch and many of them are not risk takers. They want certainty, interest and assured high returns. We cannot afford to wait. We need capital and scale in startups. We also need our companies to be bigger for more investments to pour in. Chinese companies make large enough bets, investing $4-5 billion. Only Reliance (RIL) can do that in India.

The question is what do we do to avoid being a digital colony. We need data privacy and data residency laws. The law should say that data and the server should reside in India and be regulated by our laws. The data privacy pact should be between me (the consumer) and the server, where it is located, and not the company that owns the server. All data regarding Indians should be in India.

We should not listen too much about what these overseas companies say about there being a single global server and global collated data. What data goes out should be determined by our law and government. We should also create conditions for Indian capital to come in. Insurance firms and institutions should put in money. The Life Insurance Corporation (LIC) should invest in startups. They have a balance sheet of Rs 25 lakh crore and they can easily invest $2-3 billion every year. In fact, they have already put in some money in the SIDBI startup fund.

It would be a tragedy if India becomes a digital colony in the near future. We need a very fast response from our government to prevent this. 

TV Mohandas Pai is the chairman of Aarin Capital and Manipal Global Education. He is also the former CFO and HR head of Infosys


Mohandas Pai