/The pertinent question of the hour: How fair are practices of tech giants in India?

The pertinent question of the hour: How fair are practices of tech giants in India?

(This story originally appeared in on Aug 01, 2020)

NEW DELHI: US lawmakers’ six-hour grilling of the CEOs of Facebook, Google, Amazon and Apple on Wednesday renews the question about fairness and transparency of practices followed by these companies in India. If the tech giants are suspected of crushing competition and lax about privacy and data protection in the US, they could be doing so in India too. India is the fastest growing market for several of their businesses.

Investors and entrepreneurs agree that while India needs to attract more foreign investment, it also has to build a clearer regulatory system to safeguard national interest – a system that strikes a balance between the needs of nurturing local businesses and making India attractive to investors from abroad.

“India needs to build capabilities to identify businesses that violate customer privacy, are not registered to do business in India and do not pay taxes. We need clear regulations and must take action where appropriate,” said Krish Gopalakrishnan, co-founder of Infosys and chairman of CII’s startup council.

A committee headed by him on governance of non-personal data had this to say in mid-July: “Allowing the possibility of data monopolies, in a large consumer market such as India, could lead to the creation of imbalances in bargaining power vis-a-vis few companies with access to large data sets accumulated in a largely unregulated environment, on one side, and Indian citizens, Indian businesses including startups, MSMEs and even the government, on the other.”

Some tech entrepreneurs feel global giants are getting away lightly. “Government should wake up to how much we are giving away to the tech giants for free. When we are running our companies, we have engineering teams here, the product is developed here, and our servers are hosted in India. They just have an India head who can be replaced without disrupting operations. The dependent resources for most of these companies, including product decisions and development, are outside India,” says Aprameya Radhakrishna, co-founder of now-acquired TaxiForSure, who runs social media platforms Vokal and Koo. “These companies are also playing their market valuation based on India’s future growth potential,” he adds.

Firms investing in Indian startups have asked for better monitoring of anti-competitive practices that ensure home-grown ventures have a chance to succeed. “At Competition Commission of India, there should be a panel on anti-competitive practices in the digital world. The price-determination algorithms used by companies should be open for scrutiny,” said Anand Lunia, co-founder at India Quotient, an investment firm that funds startups. “If these companies are simply importing products into India, there should be a higher tax, the same way if you order something manufactured overseas,” he added.

Foreign investors say the government should follow a balanced approach to enforce accountability, ensure privacy and transparency. “Policy formulation always lags behind technological innovation. Government should adopt an approach in which interest of citizens, investors, and tech companies is protected. A non-transparent process without consultation will create uncertainty and stress among investors, nations and the policy makers,” said Mukesh Aghi, president and chief executive officer at USISPF, which represents US companies and works for strengthening the US-India strategic partnership.

“India needs to attract a minimum $ 100 billion FDI annually (current $ 49 billion) to grow robustly for the next 20 years. Boardroom decision makers like predictability, transparency, a fair and quick dispute resolution. They like an even playing field and access to the markets. Long-term investors are looking at 20-30 years’ investments and hence assurance with regards to any change of government will not impact policies implemented by the previous government,” said Aghi.

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