Capital dumping is a non-issue, says Paytm’s Vijay Shekhar Sharma

Even as a group of startups is rallying under the leadership of Flipkart’s Sachin Bansal to form an industry body against capital dumping practices, Paytm founder Vijay Shekhar Sharma dismissed the calls and termed it just a business tactic.

He said some of the companies arguing for government protection from foreign rivals are themselves funded by global investors, reported The Hindu.

“That is the rule of the business. You optimise your tickets and then you play on that card. The same firm which is worried about ‘international companies’ is actually international, internationally funded and internationally-owned by shareholders,” Sharma was quoted as saying at the India Economic Summit 2017.

Sharma said some people don’t see Flipkart as the winner in the long-term because the competition (Amazon) has ‘endless’ supply of money, according to the report.

Refusing to endorse the call for protectionism, the Paytm founder said, “I will say that as an entrepreneur you pick the ticket which is the most optimum for you right now. If I have the money … don’t care about it. If I haven’t got the money, then this guy is international.”

“Every business picks up a card. Indian entrepreneurs pick that card (capital dumping) on the day they do not have money… now they have money, so they won’t bother about it for some more time,” he said.

Last week, The Economic Times reported that a number of prominent Indian consumer internet companies, headed by e-commerce firm Flipkart, ride-hailing service Ola, and travel portal MakeMyTrip, are coming together to form an industry body to represent local ventures, seeking protection from resourceful global rivals. Christened Indiatech.org, Flipkart’s Sachin Bansal is the founding president and chairman of the group. Flipkart, Ola, MakeMyTrip, Quikr and Hike are likely to form the non-profit association’s executive committee.

The primary objective of the association would be to convey to the government that home-grown companies should dominate the local internet market, the report said.

The debate around a ‘level-playing field’ for Indian startups began in December last year when Bansal and Ola co-founder Bhavish Aggarwal hit out at foreign-origin firms on their capital-dumping practices.

Bansal reignited the controversial debate again in February this year at the IAMAI India Digital Summit in Delhi when he advocated for ‘selective globalisation’, saying it is something that the US and China already follow. He said it was a mistake not to think of internet and technology as a strategic sector and to depend on China and the US to build that.

“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 don’t get prematurely killed by a company coming from China,” news agency PTI reported him as saying at the summit earlier this year.

“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 said.

Ola’s Aggarwal said it is 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 argued.

Prominent venture capitalist Vani Kola, founder and managing director of Kalaari Capital, had also joined the controversial debate. In a post on online publishing platform Medium.com, she extended support to Indian entrepreneurs in their fight against foreign-origin 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 late January this year.

She highlighted the consequences of a lack of regulation against capital dumping practices in the e-commerce industry. She cited the example of China and Europe, whose market value in the internet sector is $1 trillion and $50 billion, respectively. This is because while China banned companies like Google, Twitter and Facebook, Europe did not, she explained.

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.