Phew! The last week was a rather lengthy and horrendous one, for most people. Well, at least for people living in the two major political superhouses – US and India. The reasons for the cacophony and pandemonium are not known to only those, who have just awoken from a state of hibernation or Cryosleep!
All the blame game for the past week has revolved around two topics which have caught worldwide media attention, and turn insomnia into a regular affair among the masses.Namely, the two events which have jolted the nation, and the world at large are:-
- Currency Demonetization
- US Elections
But is it so bad for the nation?
An in-depth scrutiny tells us that these two happenings might be actually good for some division of the economy – at least for startups.
And, how you ask?
Let’s take a deep dive on both – the Currency Demonetization and US Elections, and try to gain a better understanding on how they might bring great benefits for Indian startups.
- Currency Demonetization
The Demonetization of Rs. 500 and Rs. 1000 notes has been the cause of massive mayhem in the country and among people at large. With PM Narendra Modi’s announcement, the old Rs. 500 and Rs. 1000 notes went out of circulation, and now only remain a useless piece of paper. What followed thereafter were citizens lining up outside banks and ATMs, to either exchange the old notes with new ones, or withdraw the later.
However, behind the bedlam – Demonetization has proven to be a blessing for startups in the country. With the government putting a cap on the daily withdrawal amount, people who once treated mobile banking and mobile transactions as an option, had to change their ways. As a result, numerous startups gained importance and efficacy.
Food delivery startups such as Swiggy, has made the move of accepting payment through cards, as they have handed POS machines to delivery agents. This way, the startup ensured that they don’t lose business even when people were in a state of panic. Zomato also celebrated Demonetization using Twitter and promoted card payments.
Other online businesses like Snapdeal have gone with the hashtag – GoCashFreeWithSnapdeal to support the government’s move. Moreover, the brand has chosen to give a 10% discount on all orders paid online. Myntra also took to Twitter to advise users to use online transactions instead of COD.
Apart from food and e-commerce, mobile payment startups such as Paytm, Freecharge, Mobikwik, etc, stand to gain immensely from Demonetization. Already, e-wallets have observed an increased usage after this move, along with an immense opportunity to increase customer base. Paytm has hit a record number of payment transactions at 5 million per day and will process over Rs 24,000 crore, which is more than any other payment network in the country. Paytm also claims that they have 1 million new saved cards, till two days after Demonetisation.
Consequently, all startups that uses one or the other e-wallet system, such as cabs, online flight & hotel bookings, groceries & other services, received a huge impetus. According to MobiKwik, their travel partners like Lemontree, Makemytrip, IndiGo, Cleartrip and Yatra witnessed a surge of 300% in transactions via e-wallets along with Big Bazaar, Grofers, BigBasket etc.
With India adopting the ‘minimum-cash’ attitude, PM Modi’s Digital India and Startup India will also receive massive boost. Indeed, Demonetization has proved to be a boon for startups, even when the rest of India reeled under pressure.
- US Elections Results & Impact on Startups
Amidst a lot of foul cry and controversies, Donald Trump easily defeated Hilary Clinton to emerge as the 45th President elect in the recently concluded US Elections. Though Clinton was a clear favourite before the voting started, it was Trump who went home with the cake – with a total of 290 electoral votes, compared to the 232 that Clinton managed to win.
While most of India has been sceptical with Trump’s election as President, especially because he had made it clear in his several campaigns that he is against IT outsourcing or immigration. Trump also terms H1B visa programme as ‘unfair’, and he has stated earlier that he wants to end the programme.
With Trump’s strict policy on immigration, the $150 billion Indian IT industry stands to lose significantly. At present, 60% of software India produces is exported.
However, the future for Indian startups might not be all gloomy even after Trump’s election. The following pointers will elucidate why:
- According to NASSCOM, Trump’s views are based on ‘fabrications put out by critics of the sector’, and he will surely work with the new administration for the benefit of Indian IT Industry.
- A lot of US-educated individuals have moved back to India, as compared to 5-10 years ago, India’s startup ecosystem hasn’t emerged as a specific motivator. If Trump stays true on his promise on immigration, startups in India might achieve enough shine to jumpstart that process.
- Indian startups will gain a lot demand as 44% of startups in US have an immigrant founder. If a chunk of that population chooses to come back to India, it will mean a growth spurt in India’s startup ecosystem.
- Although Trump wants to implement stricter immigration laws, he also wants to woo Indian entrepreneurs and students to US.
What are your views on these two recent mind-boggling events? Do you think they will alter the startup landscape in India significantly? Let us know your thoughts in the comments below.