Financial inclusion through increasing digital payments, innovation, e-commerce, homegrown high-speed telecom networks coupled with investments from global hardware and software giants make the perfect recipe for the futuristic tech company we have in our midst – Jio. China, which was a cash-based economy in the early 2000s, has made an economic turnaround since the last decade, all thanks to the approximately 577 million users who started using digital payment services. And since 2019, there has been a growing tendency to ditch cash for digital payments. This transformation didn’t happen overnight and the credit for this significant change is attributed to Chinese tech giants like Alibaba’s Alipay and Tencent’s social media platform WeChat.
India’s very own David to fight the Chinese Goliath
Before Jio, Reliance had a share value of around INR 500. Also, Mukesh Ambani’s goal, or shall we say ambition, of making Reliance a debt-free corporation by 2021 attracted a positive response from various conglomerates around the world. The positive response soon started pouring into the company, in the form of investments. The result? Share value tripled in four years. The credit goes to Reliance’s new partners in Alphabet, Facebook Inc, Qualcomm and Intel – companies that are well-positioned to support Jio with its hardware and software needs.
But, one question that remains to be addressed is how Reliance plans on fitting its new partners in the company’s future plans. Especially when Mukesh Ambani formally announced the company’s plan to design and develop homegrown 5G solutions in its annual general meeting this year. Interestingly, a Bernstein report points out that, “There still will be external dependence, as most of the semiconductors used to power the radio access networks are likely to be foreign”. So how all of this pans out, in the end, remains to be seen.
E-commerce, Content, and Fintech Investments for Financial Inclusion
Facebook can help JioMart capture a big chunk of the market in e-commerce, while JioTV can produce similar outcomes in content and advertising. Facebook-owned, WhatsApp Pay and JioMoney together can revolutionise digital payments in India, the same way Alibaba and Tencent’s WeChat Pay captured the digital payment market share in China.
For fintech businesses, payment companies, e-banking firms and startups to reap the benefits of their investments, internet penetration and high-speed internet connectivity is very important. Also, the dream of building a “Digital India” cannot be realised completely until and unless we have a steady, consistent data infrastructure in place. “Partnership with FinTechs shall enable RIL to move into Payment-As-Infrastructure model, as more aggregation is now happening at the technology level itself. RIL would identify future disruptors in bud-stage and it would either acquire them right away or in the distant future,” said Ritesh Agarwal, Founder & CEO at fonePaisa.
The challenges that lie ahead
When it comes to the localisation of data and the protection of data, there have been arguments that localisation will increase the cost and discourage companies like Google, Microsoft and Amazon to set up their cloud services. At the same time, data localisation will reduce the cost of digital subscription and services for the end-users. The additional burden of storing data locally impedes the growth of Indian startups. Many startups set up their operations abroad as the cost for cloud infrastructure put them at a competitive disadvantage, meanwhile, huge Indian corporations will not have any difficulty in storing data locally within India’s borders. It’s a tough choice between national security and securing startups’ interest for the government. And we think this stalemate will last until new reforms are introduced.
“…the wealth generated by India has to be in Indian hands, not foreign entities”
Reliance seems to have shown a commitment towards data protection as well as data localisation. We know that Mukesh Ambani made a statement that “Data is the New Oil”, but for the time being, let’s hope that he knows how to keep this new oil safe for us. For India to succeed in this data-driven revolution, we will have to migrate the control and ownership of Indian data back to India, in other words, the wealth generated by India has to be in Indian hands, not foreign entities.
Jio will set up data centres in locations across India, consisting of next-generation computing, storage and networking capabilities, and Microsoft will deploy its Azure platform in these data centres to support their investments. The initial two data centres are being set up in the states of Gujarat and Maharashtra. RIL traditionally was not a part of the IT sector. However, in India, every large enterprise or a conglomerate has its own IT services arm. For eg. Tata has TCS, Mahindra has Tech Mahindra, etc. and now RIL is trying to create a new revenue stream for itself as there is a huge demand for cloud services in India.
If Reliance continues its dream run with Jio and extends it to JioMart to compete with Amazon and Flipkart, while using the new payment services made available by its partners, the company will join the ranks of e-commerce giants like Alibaba and Tencent. So far, it looks like Reliance has placed its bet on the right horse. Homegrown 5G technology would have already set alarm bells ringing in Huawei, Xiaomi and BBK, and Reliance going after their business in India is only a matter of when, not how.