How Is India Slowly Becoming A Tech Gaint
With companies like Amazon, Google, Microsoft, Facebook, Intel and many more investing billions, in Reliance. India is onto becoming a Tech Gaint. And the man behind all of this is the current CEO of Reliance Industries Limited, who used to work as a gas station attendant, Mukesh Ambani
Reliance started in 1973 as a yarn trading business from a small 500 sq. ft. facility. Dhirubhai Ambani was the founder and one of the first employee, whom he treated like his partners was his son Mukesh Ambani. Mukesh started working at the manufacturing plant in the early 1980s, he worked on generating efficient systems within the plant. Then the company expanded its yarn business by setting up a Polyester Filament Yarn Plant in Patalganga. The project was led by the 23-year-old Mukesh Ambani, it took Ambani 18 months to complete this project. In 1991 with the establishment of the Hazira Manufacturing complex, Reliance became the world’s largest integrated producer of polyester. And then in 2000, the world’s largest refinery was built in a record 36 month, Jamnagar Refinery.
In 2002, Reliance enters the Infocomm, to revolutionize mobile service in India. The plan was to provide a low-cost voice mobile service, at the time services in India were among one the highest in the world. Ambani came up with a plan to bring costs down by 98% for a call from Mumbai to Delhi (about 24 hrs drive). The goal was to bring down prices for the masses which was about 95% of the population, these people were unable to afford a calling service. Sadly in 2002, Dhirubhai passed away and the company was distributed among the two brothers, Mukesh and Anil.
In 2005, the company reorganized its business by breaking into four separate entities: power generation, distribution, financial services and telecommunication. In 2006, Reliance entered the retail market in India with the launch of Reliance Fresh. By the end of 2008, Reliance retail had close to 600 stores across 57 cities in India. In 2014 Reliance Retail had become the largest retailer in India, they create credibility by introducing international brands to Indians such as Diesel, Marks, Payless Shoesource, and many more. As of 2019, Reliance Retail operates over 10,000 stores across 6,700+ cities with a retail area of over 24.5 million sqft. The company’s retail business is growing day by day. Amazon reportedly is looking to buy 9.9% stake in Reliance Retail.
After launching Reliance Fresh’, Ambani had become India’s first rupee trillionaire (approx. 13 Billion dollars). So how does this all tie into becoming a tech giant? Well, by now Ambani had made a name for himself, Indians knew who he was and trusted his brands, mainly, Reliance
In 2014 while addressing at the Annual General Meeting of Reliance Industries. Ambani said he will invest Rs 1.8 trillion (23 Billion Dollar) across his businesses over the next three years and launch a 4G broadband services by 2015.
And on December 27th, 2015 Ambani launched Jio, a 4G phone service that would provide free domestic voice calls and affordable data plans. Jio crossed 50 million subscribers within 83 days after launch and have more than 331 million subscribers now (July 2020).
Selling a phone service is just the beginning, how do you make even more money on a platform that you provide at an affordable rate? In 2019, Reliance acquired 87.6% stake for 2.95 billion Indian rupees ($42.33 million) in an Indian e-commerce platform for fashion, Fynd. E-commerce is not as popular in India as a physical store, however, with the advancement Ambani’s bringing in the country, e-commerce is being set up to grow. The overall retail market in India is estimated to be worth $1.2 trillion by 2021 of which e-commerce is expected to be at $84 billion, but that number could go a lot higher with Ambani’s plans.
This is where things get interesting, with India being the 5th largest consumer markets in the world, and a lot more people expected to subscribe for Jio due to their rates, companies like Facebook, KKR, Intel and Google are investing in Jio. Facebook has invested $5.7 billion for 9.9% stake in Jio Platforms. Intel invested $250 million in Indian telco Jio Platforms. Jio was able to raise $15 Billion in total from all the investors combined. These investments helped Reliance Industries become net debt-free. And then Google jumped in, with an investment of $4.5 billion. Google and Jio plan to develop an affordable Android smartphone that could bring million more Indians online. There are reports that Microsoft is also planning to invest $2 billion in Jio Platforms, however, that report cannot be confirmed as of today(July 2020).
With these investments, it seems like Jio is planning to introduce more people to experience the online world. India is the only major open Internet market where companies such as Amazon and Walmart are competing for a market share. Amazon’s CEO said that Amazon expects to export $10bn worth of India-made goods by 2025, and has invested $6.5bn in the country. Walmart has invested $1.2 billion. India’s e-commerce market is currently dominated by Amazon and Flipkart (backed up by Walmart). But that may soon change.
Ambani’s Reliance Retail and Jio Platforms have introduced an Indian online grocery delivery service, JioMart. JioMart delivers grocery and daily essentials to customers from a nearby store. Reliance introduced JioMart at the end of 2019 and it is challenging Amazon and Walmart. Facebook has made an agreement with Reliance to explore ways to collaborate on serving 60 million businesses with customers in India. Facebook is also hugely benefitting from this deal, and not just through their investment. As the data charges will go even lower for the masses, Facebook will grow in India and will become even bigger globally.
Amazon and Walmart as big as they are cannot operate the same everywhere around the world. The demographics, rules & laws change in every country and so new strategies have to be made in order to serve customers. And this is where JioMart may have the upper hand, instead of having a warehouse, as Amazon does, JioMart offers an Online to Offline business model. Using JioMart customers will use an official WhatsApp number to place an order, JioMart will connect people with local retailers and the retailers will deliver products to either customer’s doorsteps or a location in the customer’s vicinity. This eliminates all the cost that goes into building an Amazon size warehouse. With JioMart the transaction is also much more secure than that of a typical online store, JioMart automatically assigns a neighborhood store to fulfill an order and the store sends an invoice through WhatsApp. This way a transaction is made after customer’s satisfaction. As of now, JioMart is not expanded as big as Amazon and Walmart but Ambani has said that “We will cover many more cities, serve many more customers across India, and expand to many more categories”
Reliance’s digital plans do not stop with e-commerce. The company has developed a video conferencing platform similar to Zoom, JioMeet. JioMeet was launched on April 30th, the platform saw 5 million users within days of its launch.
“I believe that the time has come for a truly global digital product and services company to emerge from India, and to be counted among the best in the world,”. Mukesh Ambani is the richest Asian and he is the current CEO of $100 billion conglomerate Reliance Industries, he is worth about $77 billion. With the backing he has from major companies he could be a very strong force, revalorizing India’s tech future, and introducing the world with an Indian digital product.
