India’s ‘top-down’ digital policy, discussed in ‘Making a virtue of necessity’, was caught up in a fast-swelling wave of grass-root engagement
The speed with which the Internet gained acceptance in India’s population could upend the optics about the country’s future
1.2 billion Indians benefited from the Aadhaar biometric registration, an identification process laying the groundwork for digital access to public services
443 million data subscriptions were registered as of July '21 by market leading Reliance Jio phone - a 37% share, with competition from Airtel (354 million subscribers) heating up - and average data consumption reached a world record of 15.6 Gb per Jio subscriber (expected to increase to 25Gb by 2024)
1.16 billion total mobile users are recorded across the various networks, according to the Telecom Regulatory Authority of India (Sept. 21)
2 billion monthly transactions were recorded over the inter-bank Universal Payment Application (UPI)
Alleviating geographical constraints, the explosive growth of Internet applications is stampeding the best laid-out plans
Digital applications turn out to be a unique complement for everyday life in emerging markets, with India leading the way
While alternatives were obviously available in advanced economies, the Internet and mobile apps offered a wealth of opportunities for
- communication, foremost in countries where costly telecom networks limited the opportunities to keep in touch and exchange information, a very human demand
- entertainment, where there was very little beyond standard television fare
- access to public administrations, bypassing often corrupt intermediaries for the allocation of subsidies
In retrospect, access to India’s retail market, allowed under new 100% foreign-owned rules for the benefit of e-commerce companies since 2016, to prime digital consumer acceptance may have been overkill
Hardly indispensable to ensnare India's population in the trappings of the Internet age, the push for e-commerce was at least premature in adding foreign behemoths, driven by market share metrices, to the mix
With ambitious policies of their own, the American firms, committed to large investments, were bound to make awkward partners with official India
- Amazon
investing $5.5 billion since 2016 - Walmart Invalid tag asset buying a 77% stake in India’s Flipkart for $16 billion in 2018
In a hurry to stake out their participation in such a promising consumer growth market, the American giants, and especially Amazon building its presence from the ground up, showed little appetite for the role laid out by official India
The “market place” model, favored by the regulator, plays out as a pure digital intermediary between vendors and consumers or retailers - an approach Alibaba fine-tuned in China
The intention is to protect the India's vast retail sector from the competition of e-commerce platforms trading on their own account, and was bound to clash with Amazon's worldwide business strategy, combining its role as intermediary with direct sales as detailed in our 'Playing dumb in Delhi"
Because the political stakes are so high, the official policy will not be tweaked even though the battle against Amazon’s global business model is not won…yet, as the recent investigations published by Reuters demonstrate (again)
Undoubtedly aware of the political factors, Amazon is in the game to gain the time necessary to carve out market share...
Unruly foreign e-commerce interference may not even be the highest wall to scale
Managing payment transactions growing exponentially seems to be a challenge of a different order of magnitude, even though a carefully laid-out process drew on the lessons from China’s digital roll-out
China’s unintentional cementing of two mutually exclusive third party payment systems, Alibaba’s Alipay
However, to a large extent victim of its own success, official inducements to rely on digital communications upended the processing of payments by the sheer volume of transactions generated - as we will discuss in "Rain on the Digital Parade"