Paytm Founder Vijay Shekhar Sharma on Thursday dismissed calls from some Indian e-commerce players for protection from foreign capital dumping, as just a business tactic, even though some of these firms are themselves funded by global investors.
“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, he should not be given,” Mr. Sharma said while replying to a question on capital dumping at the India Economic Summit 2017.
“That is the rule of the business. You optimise your tickets and then you play on that card. The same company which will be worried about ‘international companies’ is ‘international’ and ‘internationally funded’ and ‘internationally-owned by shareholders.’ It is just that on which day you want to create which card,” Mr. Sharma said.
However, he also pointed out that some people may not see e-commerce major Flipkart as “long term success” because its competition has “endless” supply of money.
The issue of capital dumping was first raised by Flipkart’s Sachin Bansal and Ola’s Bhavish Aggarwal last year when they had said that the government should design policies which will favour home grown companies.
The Paytm founder also citied the example of Baba Ramdev. “He pitches Indian. He says we will take on Nestle. Every business picks up a card. Indian entrepreneurs picking that card (capital dumping) on that day they didn’t have money.. now they have money they wont bother about it for some more time,” he stressed.
Kartik Hosanagar, professor at The Wharton School, University of Pennsylvania pointed out that foreign companies coming in is great for consumers as this drives competition. “Amazon coming in has forced Flipkart to up its game, Uber coming in has forced Ola to up their game. There is no doubt that they coming is a huge win for customers. And I think Indian companies can take them on.”
Terming calls for protection from capital dumping as “just convenient talk,” Mr. Hosanagar said, “A year or two back, the same entrepreneurs asking the government for protection… they brought in foreign capital and that is ok but foreign companies can not come in.”
Earlier during the panel discussion, Mr. Sharma had pointed out that, “We may be giving less probability of Flipkart to becoming long term success purely because there is an endless money supply (from Amazon). One day or other endless money supply can win over finite money supply.”
He went on to add that the challenge for Indian companies is when they fight with foreign companies that are founder-driven. “…Founder-led companies like Jeff Bezos’ (Amazon) and Travis Kalanick’s (Uber) … You can fight anything in India built by Google. I am not saying that they will not be aggressive but there is not enough mojo to fight like a founder.”
Telangana IT Minister K T Rama Rao, who was also part of the panel, pointed out innovations, even if done in India, are not likely to be valued as much as when done out of Silicon Valley.
“…when I saw as an outsider that WhatsApp valued at $19 billion I almost fell of my chair. Hypothetically speaking, if had WhatsApp been an Indian company like Paytm, do you think it would have gotten the same valuation? I don’t think so.”
Mr. Sharma agreed. “They treat third world companies like third world companies… third world valuation,” he said.
However, Mr. Hosanagar said while he agreed with what the others were saying, the quality of products built in India lacked the quality of what is built in the valley. “It is hard to hire high quality engineers at scale in India. That is an unfortunate reality,” he said.
