Free Market For Start-Ups is Bit Of A Fool's Paradise

Monopolized market, stifled competition, job loss, restricted foreign capital, tax revenue loss, pro-start-up policy collapse, call for market regulation are connotations ascribed to recent uproar over capital dumping by its believers on one hand. On the other, we have cloned business models, desperate investor call to keep their returns intact, wasteful cash splurge, inflated valuation, need for free market, herd mentality that hyped up investment in few sectors, foreign direct investment in e-commerce marketplaces; from those negating charge of capital dumping as absurd. Precisely, hence, the question is would there be implosion of sectors dominated by foreign competitors in an unregulated market with mild tremors to entire ecosystem or a free trade driven robust ecosystem where capital’s role is limited to being a commodity.

- Sandeep Soni

In hindsight, everyone is advocating the hackneyed phrases - need of a level playing field, free and open market, or even the argument that India is not a closed market like Russia or China. That does sound fair but there at times, is need to refrain from being over ideological.

Capital Awarded vs. Capital Earned

Let’s look at it very objectively. The bone of contention is companies like Amazon, and Uber (that failed in China) are funding the negative gross margin sales or cash burn of their ‘Indianized’ arms even as their ‘actual Indian copycats’ like Flipkart and Ola ‘earning’ investments from investors. The question hence, shouldn’t be how foreign is Flipkart (the fact that it is registered in Singapore is a separate matter) or Ola (that like many other start-ups is backed by foreign capital) or other startups because eventually their investors are third parties unlike Amazon India or Uber India that are awarded with war chests from their parent companies. To be fair, there has to be a cap on how much of this awarded capital can be used by their companies and eventually striving to earn the follow on capital from other investors, whether domestic or foreign. That can be a level playing field.