As Jio Marries Telecom Pipe And Platform, Its $20 Billion Fund Raise Will Spur Boom In Tech FDI

Few individuals or companies make such an impact as to turn the fortunes of a country in the process. In the past, we have had iconic business leaders like Jamsetji Tata and G D Birla; more recently we have had Dhirubhai Ambani and his son Mukesh doing the same in a hyper-competitive era.

There are many other names, but these come to mind immediately. The father-son duo of Dhirubhai and Mukesh have effectively started not one, but two, revolutions that have completely changed the face of Indian business and the country’s growth trajectory.

The late Dhirubhai almost single-handedly set off the equity revolution by creating rupee millionaires out of ordinary people. The equity cult allowed all Indian companies to lower their project costs dramatically – something that was, till then, financed by high-cost institutional debt.

Indian manufacturing started thinking global scales only after Dhirubhai short-circuited the licence-permit raj through his less-than-kosher tactics of “managing” the political and policy environment to his advantage.

And now his son Mukesh has enabled India’s takeoff in the global digital sweepstakes, where the winner takes all. With Jio Platforms, he has done the impossible. Who else can get the Godzillas of global tech – Google, Facebook, Intel and Qualcomm – to invest in one company, all at the same time, and on his own terms? This is apart from financial investors like KKR, General Atlantic, several global wealth funds. Partnership with another tech T-Rex, Microsoft in cloud technology, could yet be another gusher.

At the Reliance Industries Ltd annual general meeting (AGM) yesterday (15 July), Mukesh Ambani announced the creation of India’s first homegrown 5G technology, and plans to make one of the cheapest smartphones ever built in the world, based on Google’s Android operating system. In five years’ time, Indians may not be significantly wealthier than now, but almost no Indian will lack an affordable smartphone that will cost far less than a month’s MGNREGA wages.

This achievement is humongous for three reasons:

One, this is the first time a mobile services operator – who owns the pipes to your home, office and handheld phone – is also going to own the technology infrastructure behind it and the IPs (intellectual properties) that go with it. It will marry all of it to a platform, Jio Platforms. Reliance Jio will thus be the first company in the world to try and marry pipes to platforms, both of which tend to create network monopolies.

Two, by raising Rs 1.52 lakh crore in less than three months from 13 foreign technology partners and investors, Jio has effectively heralded a new reality: that India’s future growth and foreign direct investment (FDI) will be driven by technology and digitisation.

Just one company, Jio Platforms, has raised $20 billion. That is just for starters. Google has promised to invest $10 billion in India, including the $4.5 billion in Jio Platforms; Amazon will invest $1.5-2 billion to beef up its Indian operations and also develop solutions for small and medium enterprises, creating one million jobs; Walmart has just led another $1.2 billion round to back its investment in Flipkart; two Apple contract manufacturers – Foxconn and Wistron - may invest another $1 billion plus using the government’s Rs 42,000 crore production-linked incentive scheme for smartphone manufacture in India; Microsoft may yet join the rush with further billions.

It is already investing big in cloud computing in a partnership with Reliance and in building data centres in India. Its investment arm, M12, has set up shop in Bengaluru.

With all this frenetic tech-led investment inflows, even more will flow in, since competitors like Airtel and other tech companies will not be sitting idle. One should expect more billions to flow in. China, which is paying the price for border belligerence, has missed out being invited to the party.

Three, given a huge financial war-chest, Jio Platforms now has the capability to join the big league of tech giants. If the US has Google, Apple, Facebook, Netflix, Amazon and Microsoft, and China its Baidu, Alibaba and Tencent, India will have Jio.

If the Jio pipe-cum-platform works as announced, delivering everything from cheap smartphones to data services to music, movies, video conferencing and e-commerce capabilities (through JioMart), we can add Jio to the list of global tech monopolies. Its success should spur other tech titans like Tata Consultancy Services, Infosys, Wipro and HCL Tech to speed up their own conversion from labour arbitrage-based services to product and platform companies.

Dhirubhai set off the equity cult and kickstarted global scale manufacturing in petro-products and petrochemicals. His son has set off a tech boom, using massive investment in pipes and platforms.

None of this would have been possible without the Prime Minister’s emphasis on digital technology, and atmanirbhar Bharat, something Ambani was not hesitant to acknowledge at the AGM.

India is again at the takeoff stage – this time in big tech. We cannot afford to mess this up.