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It has often been argued that the biggest impediment to India emerging as the favorite foreign investment destination is the unreasonable and unreasonable objections raised by those who say they conjure conspiracy theories and invoke dire consequences like a magician pulling rabbits out of his hat.
Decades of perverse socialism, stemming not from ideology but from inefficiency and insufficiency of government, instilled in most Indians a hatred of big industry, profit generation, and wealth creation. Virtue was tied to companies that were permanently in the red; on the contrary, it was sinful for companies to be in the black.
Attitudes, both in government and among the people, have undoubtedly changed and picked up pace in recent years. Young and aspiring India is comfortable with the idea of industry generating profits, generating jobs and generating wealth. The government realizes that yesterday’s Soviet-style command economy totems are irrelevant in the era of the market economy.
Young and aspiring India is comfortable with the idea of industry generating profits, generating jobs and generating wealth. The government realizes that yesterday’s Soviet-style command economy totems are irrelevant in the era of the market economy.
However, the conversion is incomplete: there are detractors inside and outside the government who suffer from what Arun Shourie once described as the “Instant Rejection Syndrome”: anything and everything must be rejected on the presumption that it is bad, impossible of undoing or has ‘long-term implications’. Common sense continues to be discounted.
The same goes for the Rs 43,574 million deal between Reliance Jio and Facebook. Detractors are reluctant to admit that at a time when national and global economies have entered a zone of unprecedented turmoil and uncertainty due to the massive disruption caused by COVID19, we have just witnessed the ‘largest investment for minority stake’ by part of a technology company in India. Therefore, it is important to separate the substance from the noise and for that, it is important to see this investment in the correct perspective.
We have just witnessed the “largest investment for a minority stake” of a technology company in India. Therefore, it is important to separate the substance from the noise and for that, it is important to see this investment in the correct perspective.
Before looking at what Facebook investment in Jio is all about, it is important to understand what this investment is not about. The deal does not represent a US company that purchases a controlling or majority interest in an Indian company. It is incomprehensible and absurd, for example, to compare it to Walmart’s acquisition of Flipkart.
Second, it is by no means an “opportunistic offer” to draw resources from a lucrative Indian business or the burgeoning Indian digital marketplace at a time when government attention is being diverted by a national crisis caused by a raging pandemic. Therefore, it is not a predatory purchase or a soft investment to make a small bet in the future.
Third, and it is important to note that, once again, we are beginning to hear the same old cant, there is absolutely no data arbitrage or data acquisition embedded in the transaction, hidden from public view, as This investment is also not discussed. Claiming otherwise is a spurious argument: It can lead to social media hashtags and pointless clamor, but beyond that it is no more than it is: a completely unfounded assumption.
So what is the Jio-Facebook deal about? Simply put, it is one of the most successful Silicon Valley companies investing in India’s large, fast-growing and attractive digital marketplace. It is a decision based on the opportunity available to Facebook in what will eventually be its largest and most lucrative ecosystem. The decision also reflects Facebook’s belief, as the $ 5.7 billion investor, in Reliance’s proven ability to scale and manage globally competing operations across sectors. This explains why Facebook has chosen to be a minority partner while contributing substantially to the development of a new business model.
The Jio-Facebook deal is one of Silicon Valley’s most successful companies investing in India’s large, fast-growing and attractive digital market. It is a decision based on the opportunity available to Facebook in what will eventually be its largest and most lucrative ecosystem.
Unlike business investments in other parts of the world, the Jio-Facebook deal claims the unique way of doing business in India: responding to the needs of the bottom of the pyramid. This new digital platform will not displace small local businesses. Instead, it will collaborate with them and amplify their reach and profitability. The clearly Indian-led “Kirana” retail model will be infinitely strengthened in terms of both commercial viability and job-generating capacity.
The deal and implicit investor confidence in the Indian market validate the potential of financial technology, e-commerce, and a reliable data infrastructure to drive growth and development in India. This potential extends far beyond India’s urban middle classes. In fact, the main beneficiaries of this new agreement will also be India’s still untapped rural and semi-urban digital economy. It will be a great step in shaping and shaping Prime Minister Narendra Modi’s “Digital India”.
The specter of data protection and privacy threatened by Facebook’s investment in Jio is easily dismissed. Mukesh Ambani has already stated that the data is a national resource; that value created by the data generated by the Indians must and will be displayed for the Indians; and, that the data generated in India will remain located within the geographical limits of India.
What this agreement also does is put an end to the imagined concerns in headlines about the overall health of India’s digital and telecom sectors. It shows that where viable business models exist, global investments will follow. Yes, digital and telecom companies with bad management practices and dubious investments will fail and fail. If such businesses or their apologists refuse to admit their inability to read the writing on the wall and don’t change quickly over time, they are only to blame. Neither envy nor victimization will get them out of the swamp in which they are trapped.
Current regulations allow foreign direct investment up to 49 percent through the automatic route. The other two private sector players in the telecommunications sector, Vodafone-Idea and Airtel-Singtel, have foreign partners. For them, pointing a finger at the 9.9 percent owned by a foreign investor in a competing company that has run ahead of them despite having entered the market long after its growth is hypocritical and misleading.
Let it be said and said without ambiguity: the majority, if not all, of those who oppose the Reliance-Facebook agreement are betraying their partisan policies and their criticism is tainted by conflicts of interest. Some of them see this as an opportunity to attack political opponents; Others find in it an opportunity to mock competitive and successful businesses.
These are the people who tirelessly spread the fiction that the “History of India” lacks potential and credibility. They believe that the post-COVID19 world will not only see India’s growth stunted and its economy in ruins, but also its new leadership and energy decimated. Facebook’s $ 5.7 billion minority stake in India’s largest tech ecosystem shows its belief in what it is: a creepy illusion.
We start with what the Jio-Facebook agreement is not. It would be to conclude with what it is essentially about. Investment tells the world that the future belongs to India and that the future is digital.
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