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India, one of the last untapped Internet economies, becomes battleground of US and Chinese firms

As US top tech brands continue to strengthen their operations in India, they face stiff competition from their Chinese counterparts who are stepping in to bolster their Indian competitors with billions of dollars in investments and expertise.


  |  Updated On : March 31, 2017 12:59 PM
Amazon - File Photo

Amazon - File Photo

New Delhi :  

As US top tech brands continue to strengthen their operations in India, they face stiff competition from their Chinese counterparts who are stepping in to bolster their Indian competitors with billions of dollars in investments and expertise.

In recent years, Amazon.com, Facebook, Uber Technologies and others have made significant investments and rapid rollouts in India, hailing the Indian economy as one of the last great untapped internet economies.

The US firms plan to use their massive war chests to dominate India’s market of more than 1.2 billion people, most of whom are just now connecting to the internet.

The companies have been able to use their capital to capture significant market share, but local start-ups have put up a good fight, going toe to toe with the US giants thanks to help from China. More US tech firms are pouring money into their Indian subsidiaries, expanding their cutting-edge offerings directly into the market as it begins to mature, and largely without the regulatory challenges found in China.

Amazon is investing USD US5 billion (USD6.5bn) in its operations in India, while Uber is putting more than $US1bn into the country. India is Facebook’s second-biggest market in terms of users after the US, and more people use its WhatsApp messaging platform in the country than anywhere else.

But joining the battle for India’s internet newcomers are China’s tech titans — including Alibaba Group Holding, Tencent and Didi Chuxing Technology — all of which are providing muscle to their Indian counterparts.

Alibaba this month led a $US200 million round of fundraising into a new e-commerce arm of Indian mobile-payments and online-shopping start-up Paytm.

That followed its 2015 investment, with financial-services affiliate Zhejiang Ant Small & Micro Financial Services Group, of more than $US500m for a 40 per cent stake in One97 Communications, Paytm’s parent.

“India is an important emerging market with great potential,” an Alibaba spokesman said. Chinese interest in Indian start-ups shot up just as US investment waned. In 2015 and 2016, Chinese tech firms invested $US3.2bn in Indian start-ups, more than twice the $US1.4bn invested in Indian start-ups by US companies during those years, AVCJ Research in Hong Kong said.

Indian start-ups, sometimes clones of American trailblazers, thrived for years as Western companies showed little interest in emerging markets. When US companies turned their attention and money to the Asian subcontinent, they made rapid gains and may have expected to easily outspend and outlast their tiny local rivals, said Neha Dharia, a Bangalore, India, analyst with London technology research firm Ovum.

But Indian start-ups have fought back with strong local brands and Chinese backing.

First Published: Friday, March 31, 2017 11:00 AM


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