External posturing and internal fear

Contrast this with the US, where internet vision, or internet policy, is largely driven by the White House and the Congress, with the office of the science and technology policy reporting directly to the President.

In fact, in 1997, the Bill Clinton administration released the Framework for Global Electronic Commerce—effectively a roadmap for the US’ internet landscape, at a time when the digital economy was taking baby steps. “For electronic commerce to flourish, the private sector must continue to lead.

Innovation, expanded services, broader participation, and lower prices will arise in a market-driven arena, not in an environment that operates as a regulated industry,” the Framework reads.

What about China?

Then there is China. In December 2017, President Xi Jinping announced that China’s internet was to be “opened wider and wider going forward”, yet be based on a premise of “cyber sovereignty”—where each country can govern its internet space like a physical territory.

India’s internet policy, though, continues to be ad-hoc and reactive. Far too often, the Indian government scrambles to take a position at the nth hour.

There may finally be some strategy forming now but it is just the beginning. Prasanto Roy, the head of IT services trade group NASSCOM’s internet, mobile and e-commerce council insists that “there are specific areas where we are taking up” a centralized policy approach.

“The framework for a trillion-dollar digital economy in five years [2017-2022], for instance, which is being done by McKinsey Global for the Meity,” he says. The premise: if business as usual continues, India would be a $500 billion digital economy. And if it manages to fix those gaps, $1 trillion is a possibility.

Happy doing business?

An interesting phrase we encountered during our reporting within the government and the startup circles was, “external posturing and internal fear”. Externally, most people are happy to do business. But privately, the ownership and capital behind large companies worry them.

The internet is enabling large companies to build up market share and network effects in sectors that don’t register with “traditional” regulators, like India’s Reserve Bank (RBI) for instance (in the case of financial services). While the RBI closely watches banks and other financial institutions, “With wallets, things may have moved too fast for them,” says Govindraj Ethiraj, founder, India Spend, a non-profit data journalism initiative.

And companies in that particular sector, Ehtiraj says, should be watched carefully. “It doesn’t mean roll back to 1992. Encourage foreign capital, but create regulations for only certain sectors,” he adds.

But for some, that’s not enough. There needs to be a stronger control.

“There has to be strict regulation on who owns Indian companies. Not just Chinese, even Americans,” says a senior executive at a Mumbai-based venture capital company. He asked not to be identified as he is in the process of closing a new fund and doesn’t want to take chances. “The LPs of most funds are unknown, you never know, General Musharraf could be an LP in one of these international funds. None of them should be allowed controlling interest in an Indian company,” he adds.

It gets worse. Others feel it may be a little too late.

“I think, for this government, this ship [of foreign ownership of Indian internet companies] has long sailed. The message is loud and clear: it doesn’t matter as long as the money is coming in. FDI is more important whether it is brought by a foreign company operating in India, or by acquiring a majority stake in an Indian company,” says Bipin Preet Singh, founder, and CEO of payment company MobiKwik.

While this might be a little extreme, others, however, rally for a framework to govern these companies.

“We need to start with laying guidelines if nothing else. Some of these foreign-owned companies have access to sensitive data, which needs to be regulated,” says Ajeet Khurana, head of the committee working with the government to frame a regulation on blockchain and cryptocurrency at IAMAI. In his committee, he explains, they’re laying down simple rules which can be followed before a white paper is officially released. The committee’s main objective currently is to allow a body to regulate the sector and then make intricate rules. Just like RBI and the banks.