Govt And Disruptor Clashes

Wedded to Democracy
  • It is widely believed that govts, backed by lobbies, are against disruption and innovation. Recent world events stand testimony to that.
  • In Paris, French govt released a report on the clash between cab services and digital-car sharing services such as Uber, sparked by violent attacks on the latter by registered cabs.
  • The same was also banned in Brussels. Even in London, the highly influential Licensed Taxi Driver’s Association plans on intentionally causing a gridlock on the roads of the city to protest against Uber.
  • At the same time, Airbnb – a lodging service provider came under fire after being accused of violating New York City’s hotel laws.
  • Clashes between govt and disruptors have been on since the dawn on railroads, and here illustrates the split between old and new digital data-driven economy.
  • In New Delhi, very little is heard of it and a question looms over whether technological progress will be seen as a formidable, implacable force that is beyond human influence.
  • The foremost in structuring the new economy here is the way in which is shapes its digital economy which has a unique characteristic of unprecedented access to huge amounts of capital.
  • These companies, such as Uber and Airbnb, do not need to ramp up technology or recruit more employees and instead use the funding to acquire competitors.
  • While this is the reality of international competition, it reflects how poor India is in stimulating access to capital. If we are looking for Indian equivalents of internet giants such as Google, Amazon, Facebook et al, we have to start promoting greater access to capital and encourage development of local technology infrastructure.
  • China’s internet sector has enjoyed the most foreign equity investment because of the Variable Interest Entity (VIE) that allows foreign funding without ownership. In India, e-commerce companies fail to generate foreign funding because of the absence of an easy foreign investment structures, and the enforcement directorate scrutiny.
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Exams Perspective:

  1. Technology Infrastructure
  2. Internet Freedom
  3. E-Commerce
  4. Variable Interest Entity (VIE)