Representatives of homegrown cab service providers, including Ola and Meru, have separately urged government agencies to formulate policies which will crimp the ability of US-based Uber to offer steep discounts to passengers and generous incentives to drivers. It is based upon the argument that well-funded US companies are using capital as a weapon to outgun them in India, thus resulting in potentially deleterious effects for Indian entrepreneurship.

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Ola, Meru Seeks Govt.
Intervention to Fight MNCs
Representatives of homegrown cab service providers, including Ola and
Meru, have separately urged government agencies to formulate policies
which will crimp the ability of US-based Uber to offer steep discounts to
passengers and generous incentives to drivers. It is based upon the
argument that well-funded US companies are using capital as a weapon
to outgun them in India, thus resulting in potentially deleterious effects
for Indian entrepreneurship.
Government agencies such as Niti Aayog, the department of Industrial
policy and promotion (DIPP) and the ministry of highways and road
transport have been approached for the same. The executives have also

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knocked on the doors of the Competition Commission of India stating
Uber is "dumping capital" to "create a monopolistic situation".
Startup India on the Protectionism Claim
Couple of days back, Sachin Bansal of Flipkart pronounced, "We need
to do what China did. We need to tell the world, 'We need your capital
and not your companies.' Ola’s Bhavish Aggarwal backed him, saying,
“Capital infusion is what pushes the impression of better service
quality.”
On the growing protectionism sentiment, there was mixed bag of
reactions from the Indian startup ecosystem.
Supporting Flipkart and Ola, Shashank Murali of TapChief said that
Alibaba’s first investor was Goldman Sachs and then Softbank, that
didn’t make Alibaba an American or Japanese company. Nitan Jain, Co-
founder and CEO of XOR Labs, also believed that the government
should provide state-of-the-art infrastructure and help companies.
Whereas, some said the reason that people prefer Amazon and Uber is
because of their better quality and cost-effectiveness. It said that most of
our homegrown companies like Ola, Oyo, and Flipkart are all just
imitations of well-established foreign ideas. "I think, we are losing
confidence as there's no reason for that (protectionism claims). We
should just make sure that the environment is free and fair," said
Saurabh Srivastava who is also the chairman and co-founder of Indian
Angel Network (IAN).

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Should The Government Interfere?
Meru alleges that Uber spends USD 885 million to generate revenue of
USD 415 million. Uber on its part says that it is driven by strategies
related to driving efficiency and utilization. But, Ola and Meru have to
remember the similar times faced by the traditional taxi owners and
drivers. Heavy discounting and disruptive technology implemented by
Ola gave the Taxi people a tough time to survive.
Apart from cab operators, e-commerce companies are also running to
the government seeking protection from foreign-funded giants. One
might think that they are getting the same treatment when they took over
traditional business model. However, it also led to the inevitable
evolution of eCommerce and Retail in the startup ecosystem.
Ironically, most of the capital invested across Indian startups comes
from non-Indian investors. Flipkart itself migrated out of India a few
years ago to Singapore. Thus, all the revenues are accounted for in the
books of its Singapore based parent. It's not very dissimilar to an
Amazon which has an Indian subsidiary and provides jobs to local
citizens.
“The reality is that both ‘Indian’ companies have been operating at huge
(gross) losses. Net loss is when the company sells above its direct costs
but the sale margin is less than its indirect costs. Gross loss is when the
company sells below its direct costs,” quoted Rohit Koshy of bike taxi
startup Baxi. Uber and Amazon have deep pockets and for Indian

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companies to survive, it is important to have checks and balances in
place.
“Any monopolistic attempt can never be good for a country in the long
term. Ola and Flipkart should try to become more Indian. They should
not threaten other Indian companies but partner with them. Ola should
support other startups in the transportation space and not compete with
each one of them by stifling their supply through capital dumping.
Flipkart should extend their distribution network and technology
platform to other SMEs to expand their market reach,” added Rohit
Koshy.
Conclusion
Disruptive technologies are needed and various stakeholders will either
have to adapt or perish. It’s the classic textbook model of free economies
where survival is of the fittest. Indian companies need to bring unique
offerings. The good thing is ultimatel, consumer will be the winner.