Jio, Google For India: Why incoming digital investments promise us a pole position in global markets
What is noteworthy here is that not just tech giants, but also major venture capital firms have made a beeline for investment opportunities in India.
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This year’s Google For India summit was the first instance when the much-awaited event was conducted virtually. As has been the tradition over the years, major local strategic decisions have been announced at this event. This year saw Sundar Pichai, the CEO of Google and its parent company Alphabet announce a staggered investment of USD 10 billion in India over the next five to seven years, which approximately translates to Rs 75,000 crore. This investment would be done through a mix of equity investment partnerships and operational infrastructure.
The company also announced an additional amount of USD 1 million to boost digital education in the country. Interestingly, just two days after the summit, at the Reliance Industries Limited (RIL) annual general meeting, Google’s 7.7 per cent stake in Jio platform was also announced for an amount of Rs 33,733 crore. This follows the USD 15.46 billion that has already been invested in Jio by Facebook and KKR for 25 per cent stake, roughly valuing the company at a little over USD 60 billion and allowing Mukesh Ambani to keep his promise to the shareholders towards making RIL debt-free.
Companies like Facebook and Google are increasingly investing in India because they realise the potential of the Indian market, which has been driven largely by internal consumption in the past. (Photo: Reuters)
These announcements are big-time confidence boosters for the Indian digital ecosystem and highlight the trust of global tech giants in India’s digital march and be a part of it, and come at a time when business sentiments are down due to the Covid-19 pandemic and its continuing impact. It certifies Indian technology skills and the related ecosystem, the potential of the e-commerce market and the steadily growing tech-based hardware manufacturing in India. It also shows the confidence on the Indian policy and legal edifice around the digital space which is being dynamically improved in almost all sectors like data protection laws, enhancing information technology act provisions, and e-commerce policy, and also the role of intermediaries.
Since early January, when the world came to know of Covid-19, the world has been thrown into the worst crisis it has ever faced in the last 100 years — devastating healthcare infrastructures as well as severely damaging the global economy. Most nations have projected a contraction in the Gross Domestic Product (GDP) for the current fiscal year due to the effect of protracted lockdowns across the world. What is even more frightening is the fact that with no treatment protocols is in sight and no possibility of a vaccine in the next one or two years, the crisis seems to have put a spanner in the works of the global economy, because the only accepted way to fight the virus is to maintain social distance — thereby restricting social interactions.
What though has become evident in these last months is that going ahead, technology — more specifically Information technology (IT) — with its wider applications would play a crucial role in ensuring functional availability across sectors. Work from home is fast becoming a norm at most organisations, and educational institutes have very quickly adopted digital teaching, as have remote medical consultations. As PM Narendra Modi had said during his address to the nation, this presents a huge opportunity for India to claim the pole position in the global markets.
IT and Information Technology Enabled Services (ITeS) have played a huge role in the booming Indian economy over the last two decades. It has contributed 7.9 per cent of the GDP and employed well over 4.1 million professionals. Successive governments supported the growth of the industry. However, the game changer really was the Digital India programme launched this month five years ago, which has created a fertile ground for the industry to prosper. The last five years have seen extensive growth in digital infrastructure. That, combined with last-mile connectivity to remote villages and the cheap cost of data revolutionised by Jio, has effectively made India among the best-prepared nations to create an opportunity out of the Covid-19 adversity. Today, internet has reached almost half the national population of 1.3 billion and Google alone is used by half a billion Indians.
But that is not all that is unique to India. We have one of the youngest populations in the world (65 per cent of the population is below the age of 35), a large proportion of the working population with knowledge of English and easy familiarity of the citizens with mobile apps make the perfect springboard for India in the post-Covid scenario. Facebook, Google and Amazon are increasingly investing in India. This is because they realise the huge potential of the market which has in the past been driven largely by internal consumption; as opposed to, say, China, which has fashioned its economy on the ability to export but has restricted its digital space to severe censorship, inching towards a premise of balkanisation.
Most technology giants have had longstanding interests in the Indian market for many years now. Google had located its first development centre outside America at Hyderabad a few years ago. It has also made sizeable investments in a few Indian start-ups and ventures in India. These range from Rs 3.13 crore investment in Sana Ventures in the seed funding round, Rs 3 crore in Agastya International Foundation way back in November 2013, Rs 339 crore in Dunzo to Rs 39 crore in CueMath and the very recent Rs 200 crore in the Series E funding in Aye Finance.
Besides the investments and business aspects, Google has also widely participated in social avenues. It had launched 'Station' in India in 2015 in partnership with Indian Railways and RailTel to bring fast and free public WiFi to over 400 busiest railway stations in the country. The project completed its target reach in June 2018 and was recently wound up as data costs have come down significantly. It has also worked in over 50,000 villages to educate users about Covid-19 through its ‘Internet Saathi’ initiative. The programme works in spreading internet-awareness in rural villages and also has an AI-based flood forecasting system.
By the end of 2020, Google plans to enable one million teachers and 22,000 schools across India to combine classroom approach with online learning using free tools like G-Suite, Google Classroom, YouTube and other solutions from its stable. Much of these efforts are driven through dedicated local partners also, and they play a significant role in becoming business-ready for wider programmes.
Amazon also has prioritised its operations in India as India is the only billion-plus population that it has access to. In January this year, Jeff Bezos announced an investment of USD 1 billion in the country. This offers Indians a wide variety of options, with Reliance launching Jio Mart — a venture that would connect the half-a-billion-strong Jio consumer base to a mix of online retail and physical mom and pop shops. Facebook too has invested heavily in Reliance with their stated objective of making WhatsApp the mode of choice for inter-business communication.
What is noteworthy here is that not just the tech-giants, but also major venture capital firms have made a beeline for investment opportunities in India. Most prominent amongst them is Softbank, which has invested in unicorn companies like Oyo, Ola, Paytm and Policy Bazaar. Others like M12 — the venture fund arm of Microsoft — has gone about quietly bolstering its portfolio in the country with a series of investments like Innovaccer and FarEye. And that is just the tip of the iceberg. India, with its strong domestic demand, is the place where everybody wants to be.
Needless to say, the future in India will be technology and its application across sectors. Covid-19 days have demonstrated the efficacy of employing pertinent technology. This also opens a lot of opportunities for employment in many sectors and offers opportunities for showcasing the economic prospects of the nation to a larger audience. The demographics and unique market structure make India a lucrative investment for all major tech companies and venture funds. As PM Narendra Modi had rightly pointed out, the Covid crisis has given us the biggest opportunity of the century and it is time to skill, reskill and upskill.