Why India Inc is hailing the Facebook-Jio deal as a game-changer

Facebook’s investment in Jio will empower a digital transformation in the country that will boost opportunities for eCommerce and put India in the itinerary of most global investors, say experts

e4m by Tasmayee Laha Roy
Updated: Apr 23, 2020 9:49 AM

“Jio’s deal with Facebook is good not just for the two of them. Coming as it does during the virus-crisis, it is a strong signal of India’s economic importance post the crisis. It strengthens hypotheses that the world will pivot to India as a new growth epicentre. Bravo Mukesh!,” tweeted Anand Mahindra on Wednesday.

The tweet kind of sums up the applause that the deal has received from India Inc. Facebook’s decision to invest Rs 43,574 crore in Reliance Jio for 9.99% stake, the largest FDI in India’s technology sector, is set to be a game changer, say industry heads.

For Shamsuddin Jasani, Group MD, Isobar South Asia, the deal could even lead to changes in the landscape. “The investment from Facebook into Jio is a big game changer. This is just a start of a partnership which is going to be beneficial not just for both the companies but is also going to change the entire landscape of how things are going to evolve in the future.”

With people increasingly acknowledging the power of digital, Facebook can now further expand its reach in the smaller towns and cities of India. “The platform already has tremendous penetration in the country and the partnership with Jio is just going to take their game up by several levels,” Jasani said. “The possibilities are endless. Future holds some great innovations in business that can be brought forward by this combination of Facebook and Jio.”

As Facebook and Jio join hands to accelerate India’s digital growth, the social networking giant also gets to have a stake in the last-mile connectivity of the country from being predominantly a digital player.

While announcing the deal Reliance Jio said in its statement: “In less than four years, Jio has brought more than 388 million people online, fuelling the creation of innovative new enterprises and connecting people in new ways. We are committed to connecting more people in India together with Jio.”

Prima facie, the deal will also boost social commerce.

According to Tushar Khakhar, First Executive at AGENCY09, a Mumbai-based full services agency, the deal opens up several opportunities for eCommerce in the rural areas, especially considering the impact of COVID-19. “Jio Mart will open up a new method of selling beyond existing eCommerce platforms like Amazon, Flipkart and Paytm. However, the combination of Facebook+Whatsapp+Instagram+Jio is lethal and can give more skewed touch points to the Indian audiences, especially untapped users in the rural sector. This is a big win for Facebook that has been trying to strengthen its India presence for quite some time. With the effects of COVID-19 and a lot of companies speculating to shift production base to India, this might just make India - the world’s epicenter for SMEs,” said Khakhar.      

This investment not only has monetary benefits for both organisations but will spearhead in bringing economic benefits for the nation and will put India in the itinerary of most global investors, believes Shrenik Gandhi, Chief Executive Officer, and Co-founder at White Rivers Media. “Glad to be seeing such positive news in such grim times. This deal will empower digital transformation of millions which shall boost not just the digital ecosystem but also the nation. It will be easier to get on board the next 100 million internet users thanks to this deal. I am pretty sure, in the post-COVID world, the world will be closely watching India."

Backing this was Harikrishnan Pillai, CEO and Co-founder, of TheSmallBigIdea.

“For Facebook or for any digital company, India is a priority market. The sheer digital size and growth rate makes this market lucrative. Also, global companies in these times for a reasonable foreseeable future will only invest in Asia, and in the way the current situations are rolling out, India is probably the best bet. This is not Facebook’s first investment in an Indian company and it won’t be the last,” said Pillai.

As it turns out, along with this new investment, Jio Platforms, Reliance Retail Limited (Reliance Retail) and WhatsApp have also entered into a commercial partnership agreement to further accelerate Reliance Retail’s new commerce business on the JioMart platform using WhatsApp and to support small businesses on the messaging platform.

WhatsApp already plays an important role in helping people and businesses connect in India. According to a Reliance statement, “Reliance Retail’s New Commerce platform, JioMart, is being built in partnership with millions of small merchants and kirana shops to empower them to better serve the needs of Indian consumers. The companies will work closely to ensure that consumers are able to access the nearest kiranas who can provide products and services to their homes by transacting seamlessly with JioMart using WhatsApp.”

But what happens to competition? How does this deal impact others players like the Paytms and Amazons of the world?

“As for the competitors in the retail and the payment space, two things will happen. Jio will disrupt the market and expand it real large, like any move by Reliance usually does. It will activate more users and eventually 2 to 3 large players will dominate the market. It has happened with telecom, it will happen in here too,” said Pillai.

Shedding light on the scope of the combined verified customer data that these two companies have at their disposal, Jasani further said: “If we begin to imagine the power of Jio’s Aadhar verified customer base data syncing with Facebook data we’d be able to gauge the potential in the arrangement. The opportunities are tremendous, both from the advertiser's perspective, from reach perspective, from consumer perspective, from SME perspective and how they can use this platform.”

The partnership between Facebook and Jio is unprecedented in many ways. This is the largest investment for a minority stake by a technology company anywhere in the world and the largest FDI in the technology sector in India. The investment values Jio amongst the top 5 listed companies in India by market capitalization, within just three and a half years of launch of commercial services, validating Reliance Industries’ capability in incubating and building disruptive next-generation businesses, while delivering market defining shareholder value. The partnership assumes special significance for India in the wake of the severe disruptions caused by the coronavirus pandemic in the Indian — and the global — economy. 

 According to the statement shared by Reliance, in the post-COVID era comprehensive digitalization will be an absolute necessity for revitalization of the Indian economy. “It is our common belief and commitment that no Indian should be deprived of the tremendous new opportunities, including opportunities for new employment and new businesses, in the process of India’s 360-degree digital transformation. This partnership will accelerate India’s all-round development, fulfilling the needs of Indian people and the Indian economy. Our focus will be India’s 60 million micro, small and medium businesses, 120 million farmers, 30 million small merchants and millions of small and medium enterprises in the informal sector, in addition to empowering people seeking various digital services,” the company has said.

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