Daily Answer Writing
08 September 2021

Q) Indian cyberspace is increasingly facing monopolistic tendencies from foreign tech giants. Examine the reasons behind the inability of Indian firms in bucking this trend. What role can government play in creating an enabling environment for domestic firms in this regard? (250 Words)

  1. Source: TH - Page 6/Editorial: Making them pay
  2. GS 3: Effects of Liberalization

Approach Answer:


Introduction: India alone makes the 11% of world internet users currently with about more than 50% of the population already connected. It is expected to touch a greater proportion in the coming years. It is only logical that Indian cyber firms are bound to perform better in the future. However, they face certain challenges.

 

Problems faced by Indian Firms:

    • Platform monopoly: for example the android system or the mac based phones and digital devices form the backbone of the modern digital revolution. However, they promote their associate platforms more that independent platforms. For example Android Playstore promoting google Pay
    • Entrepreneurship culture: the innovation culture in India  do not promote entrepreneurship as an integral part of the technical education.
    • Capital Investment: In order to establish such businesses, capital investment is necessary which is hard to find by in India except in few large cities.
    • Education system: It prefers theoretical knowledge more than technical knowledge.
    • Ease of doing business: Due to multiplicity of laws, taxation regimes and regulation it is difficult to do business in India rather than in US.
    • Business acquisitions: Many Indian businesses such as Flipcart have been  have been acquired by foreign firm retaining their monopoly as in the case of Wal-Mart.

 

Indian firms in the recent past have created a few good businesses online which have been able to create a mark such as Ola, Zomato, Big Basket. However, the monopoly of the platforms such as Google, Apple and Facebook presents a challenge in this regard.

 

Role that Government can play in creating an enabling environment in India:

    1. Legislation: Which can prevent platforms such as Google's playstore from priortizing certain apps and thereby creating a level playing field for Indian businesses. For example, South Korea has recently passed an 'anti-Google law'. Europe is also preparing similar regulations.
    2. Government Support: Government can, by the means of Make in India policies, provide subsidies similar to PLI scheme for manufacturing, to home grown tech start-ups which can be useful in creating our own tech giants.
    3. Data Localization: Recently both RBI and the government has stressed on the need for localization of data to reduce the risks including financial risks.
    4. Data Protection: Data security is important component in order to build trust among the users. The government has also introduced Data Protection bill in this regard.
    5. Monitoring and regulating Anti-Market activities:  Competition Commission of India,  have enough power to launch investigations into such allegations against giants like Google.
    6. Greater Funding to Universities: Which can act as incubation centres for the industries like Online gaming apps, utility apps etc. Government has recently decided to push it along with its Atmanirbhar Bharat Campaign.

 

Conclusion: A law to regulate app store operators is not a drastic step that can be taken on such issues, which is also a global trend now.  The government has promoted the setting up of the Open Network for Digital Commerce to democratise e-commerce and to provide alternatives to proprietary e-commerce sites on similar lines.

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