Snapdeal, Myntra Investor Vani Kola Calls For Government Protection For Indian Startups, Draws Sharp Criticism

It’s not just startups who’re participating the protectionism debate – even investors are now joining in. And the reception to them from the startup community seems to be just as frosty.

A month ago, Flipkart and Ola had raised hackles in the Indian startup community by demanding that their businesses be protected from foreign competitors such as Amazon and Uber. They’d claimed that foreign companies were dumping capital into India, and using their financial clout, were undercutting their Indian counterparts.

The statements had been met with much derision then – prominent names in the ecosystem had been quick to point that India was a free market, and calls for protectionism were misplaced.

Now Kalaari Capital Managing Director Vani Kola has reignited the protectionism debate with a long blogpost titled “Should India adopt policies to level the playing field for Internet companies”. In it, she argues that foreign companies use the profits they earn abroad to subsidize their offerings in India. Through this “capital dumping”, she says, they’re negating the hard work of Indian founders who “rolled up their sleeves, hit the road, understood the unique needs of Indian customers and offered their value propositions.”

Kola is right to be concerned about the threats posed to Indian companies by their foreign competitors – her firm, Kalaari Capital is an investor in Snapdeal and Myntra, both of which are pitted against Amazon. But replies to her tweets suggested that people were less than impressed with her arguments.

 

But the harshest criticism was reserved from longtime Flipkart skeptic Mahesh Murthy.

Murthy has long maintained that like Google and Facebook don’t have Indian counterparts, Uber and Amazon will also win India. He hinted that Kola was asking for protectionism because Snapdeal was struggling to compete with Amazon.

Vani Kola hit back with a tweet asking for nuanced debate. 

Mahesh Murthy has since delivered. In a blogpost of his own, Murthy says that VCs pumped money into startups which were copied versions of globally successful companies, hoping that they’d get acquired when those companies decided to enter the Indian market. Much to their dismay, Murthy says, the foreign companies found it cheaper to build their own services in India.

But things aren’t quite over – Mobikwik founder Bipin Preet Singh has since slighted Murthy, saying he’s jealous of Flipkart because he never invested in it, and hates IIT-IIM graduates because he never made it to IIT.

 

The debate is getting quite heated – one gets the sense that most people are taking sides based on which side of the funding divide they lie. VCs don’t seem altogether opposed to special privileges; neutral observers look more likely to side with free markets. And with Uber and Amazon rapidly expanding their footprints in India, and the funding environment for Indian startups continuing to be muted, things are only going to get messier.

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