A $20 billion (roughly Rs. 1.50 lakh crores) fundraising spree Might Require India’s Reliance closer to the dream of becoming a digital giant, further threatening the ambitious Strategies US Firms like Amazon, Walmart, and Zoom have for India.
Stake earnings in Reliance’s digital unit Jio Platforms drawn not only private equity and sovereign wealth funding but also Google and Facebook, a strong endorsement for an enterprise that before a few years back focussed largely on petroleum refining.
Some industry watchers equate Reliance’s digital programs – which extend from online shopping and cloud computing to telecom and digital payments – to China’s Alibaba and Tencent firms Reliance itself calls”international peers”.
Reliance has a history of disrupting rival companies. With cheap smartphones and data plans, its telecom enterprise Jio has in four decades dethroned market leaders Vodafone Idea and Bharti Airtel to become the largest telecom operator in India.
On Wednesday, billionaire chairman Mukesh Ambani said Reliance will expand e-commerce stage JioMart – which connects small retailers with customers – to offer not only groceries but also electronics and fashion merchandise.
“Jio Platforms not merely has the backend infrastructure and development capacities but also an ever expanding captive consumer base,” stated Mayank Vishnoi of Singapore-based fiscal advisory firm Resfeber International.
“The addition of new electronic products targeting a variety of sectors will pose threats to many large dominant players. Having strategic partners like Facebook and Google validates that Reliance gameplan is actual.”
The recent stake sales gave Reliance a foreign partner for JioMart, which was launched this season. Facebook’s WhatsApp, which counts India because its top market with 400 million plus users, will operate closely at linking small retailers to JioMart.
“We will cover a lot more cities, serve a lot more clients across India, and enlarge to many more categories,” said Ambani.
Asked about the possible effect on foreign businesses eyeing India, one neighborhood industry executive that advises US multinationals said:”Amazon and Walmart should be fearful.”
JioMart currently delivers groceries in just 200 cities, whereas Amazon and Flipkart provide a wide range of products throughout the nation.
Reliance also has a retail footprint of approximately 11,000 shops across 6,700 cities offering a vast array of products. Additionally, it has partnered with over 45 top international brands such as Tiffany & Co, Burberry, and Jimmy Choo.
Senior leadership at Flipkart has started keeping close tabs on Reliance, and there is a fear the Indian firm is going to have an added benefit from the regulatory standpoint, two sources close to the company told Reuters.
The Ambani family is seen as being well-connected politically. Amazon and Walmart have had regulatory troubles and confront far tighter government supervision in India, in which the prime minister was promoting self reliance.
Reliance’s digital plans extend beyond e-commerce.
On Wednesday, the company said it will develop education and healthcare solutions through its JioMeet video conferencing tool that saw 5 million users in days of its launch this past month. JioMeet has a starkly similar design to its rival, US based Zoom Video Communications.
Zoom said this month it had plans to get a significant investment in India. Asked about Reliance, Zoom said it had undergone intense rivalry before but we”understand what it takes” to become a platform of choice.
“This danger is real,” one US tech executive in India said about Reliance. “As of now, it is not changing the game, but that view can change in a year from now.”