Why MakeMyTrip’s Deep Kalra is worried about the future of Indian startups
MakeMyTrip chairman and group chief executive officer Deep Kalra has warned about a potential takeover of the Indian startup ecosystem by deep-pocketed global rivals, echoing calls for a level playing field which were earlier made by the founders of homegrown startups such as Flipkart and Ola.
In an interview with The Times of India, Kalra said that the government urgently needs to address the issue of foreign companies using capital as a competitive advantage and work towards providing Indian startups with oxygen to survive and thrive.
“Investors have made money in US and China, and India is the next big market,” Kalra was quoted as saying. “There is a genuine risk to some Indian companies. The 10-20 companies in the mid-bracket are excellent but unable to compete because there is more capital on the other side…. If nothing is done, in five to 10 years, we will find very few pure Indian companies left.”
The MakeMyTrip chairman also said that the definition of Indian companies should be limited to founder-led firms where decisions are made locally.
He said the Indian government should create a level playing field for homegrown startups to give them the runway to grow into larger, sustainable companies, just as China was successful in creating an enviable ecosystem of mammoth internet companies.
“Early-stage executives from these (Chinese) companies went on to start their own companies or invest in other startups. Today, China’s internet economy rivals the US. I am not suggesting the Chinese model of shutting out companies, which is anyway too late to do — that ship has sailed,” he added.
Apart from foreign companies such as Amazon betting big on the country, the Indian startup ecosystem is currently booming thanks in large part to billions pumped in by foreign investors such as Chinese conglomerate Alibaba and Japanese investment giant SoftBank.
Some startups such as Paytm and Grofers have ceded large stakes to these foreign investors. Others such as Ola have pushed back against this practice and sought to strengthen the founders’ rights, which Kalra said served as a good test for investors.
The call for protection
The debate around a level playing field for Indian startups began in December 2016 when Flipkart co-founder Sachin Bansal and Ola co-founder Bhavish Aggarwal hit out at foreign companies - which includes their respective rivals, Amazon and Uber - for their capital-dumping practices.
Reigniting the debate again in February last year at the IAMAI India Digital Summit in Delhi, Bansal had advocated for ‘selective globalisation’. He added that it was a mistake to not think of Internet and technology as a strategic sector and to depend on China and the US to build it.
“Indian companies can and should build products which are world-class and take them globally. Zomato, Practo and Freshdesk are clear examples. We need to figure out how do we create a level playing field so our news, restaurant apps, or anything in the Internet space doesn’t get prematurely killed by a company coming from China,” news agency Press Trust of India quoted Bansal as saying.
“What we need to do is what China did and tell the world that we need your capital, but we don’t need your companies,” he Added.
Bansal is no longer with Flipkart, having exited the e-commerce company when US retail giant Walmart acquired it for $16 billion earlier this year.
Ola’s Aggarwal had said it was much easier for non-Indian companies to raise capital because they have profitable markets elsewhere. “You might call it capital dumping, predatory pricing or anti-WTO, but it is an unfair playing field for Indian startups,” he had argued.
Prominent venture capitalist Vani Kola, founder and managing director of Kalaari Capital, had also chimed in. In a post on online publishing platform Medium.com, she extended support to Indian entrepreneurs in their fight against foreign rivals.
“The first experience of well-executed e-commerce experience for most Indians came from Snapdeal or Flipkart, and the convenience of hailing a cab from anywhere using an app came from Ola. Amazon and Uber weren’t around when these entrepreneurs were busy converting skeptics into customers,” she stated in the post published in last year,
Sharad Sharma, co-founder of iSPIRT, a think-tank for new-age Indian tech companies, too had argued for the level playing field for Indian internet companies while making it clear that the organisation does not support protectionism.
“iSPIRT’s view is that the role of the government is to create a level-playing field and the market will pick the winner,” he said. “When it comes to regulatory forgiveness, it is easier for an MNC than an Indian company. We need to eliminate such scenarios. That requires a serious government intervention,” Sharma said.
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 representatives from internet companies such as MakeMyTrip, Ola and Hike as well as venture capital firms like SoftBank, IDG Ventures, Kalaari Capital and Matrix Partners.
In a recent interaction with TechCircle, Kailasam said the organisation is 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 home-grown ecosystem by giving a level-playing field for entrepreneurs, thereby fulfilling the idea under the government's Startup India programme,” he said.