Dear reader,
Venture capital investments slumped to $2.2 billion in the first quarter of calendar year 2020 compared to $6 billion in the preceding three months.
Investors tread warily
The funding, according to the latest edition of KPMG’s Venture Pulse report, was hit hard by a combination of global macroeconomic uncertainty and the ongoing Covid-19 pandemic. The previous calendar year saw a record-breaking $14.5 billion inflow into India, spread over 909 deals.
Why the drop is significant
This comes even as India was not as affected by the virus outbreak in Q1 2020 compared to China. Concerns related to the pandemic grew later in the quarter. Read more.
Lockdown blues
The ongoing nationwide shutdown has exacted a huge toll on jobs. About 100-120 million blue-collar workers have gone without income in the past month, according to staffing agencies and businesses. And this is only going to worsen in the remaining quarters of the year unless demand picks up by the festive season later this year, experts warned.
Travel, hospitality, tourism, aviation, retail, outdoor entertainment, food and beverages and real estate have been hit the hardest. Read more.
New payments entity
The Reserve Bank of India’s attempt to bring private sector entities to participate in the governance of the country’s burgeoning retail payment system seems to be generating interest among India Inc. Mukesh Ambani-led Reliance Industries and Paytm are among top firms interested in securing licences to own and operate an entity with powers on a par with National Payments Corporation of India (NPCI).
Why it matters
The move is likely to pave the way for several collaborative products that could determine the future of India’s payment ecosystem. “A Reliance-owned entity in partnership with Facebook could introduce digital currency project Libra 2.0 in a phased manner with due approvals,” said one of the persons cited in the story. Read more.
Flipkart pumps in more capital
Flipkart has invested $90 million in its marketplace entity and digital payments platform PhonePe.
The funding comes at a time when the company’s payments arm is up against WhatsApp Pay, which is preparing to go live to a wider set of users with the help of Reliance Jio. It is also fighting a bruising battle with Google Pay, Amazon Pay, and Paytm.
Flipkart too has taken a hit in its core business with the government prohibiting the sale of non-essentials on e-commerce platforms, denting the company’s top line by more than 90%. Analysts and industry watchers are now expecting overall growth in the e-commerce sector to be in the mid-single-digits this year, down from almost 35% in 2019. Read more.
US warns on ‘Google tax’
India’s 6% equalisation levy or the so-called ‘Google tax’ on foreign online advertising platforms may impede its overseas trade and increase the risk of retaliation from countries where Indian companies are doing business, the US has cautioned.
In its latest report on trade barriers, the US also marked a slew of issues in India’s digital trade including those proposed in the draft e-commerce policy, such as data localisation requirements, restrictions on cross-border data flows, expanded grounds for forced transfer of intellectual property and proprietary source code, and preferential treatment for domestic digital products. Read more.
Global Picks
- Tech giants are profiting — and getting more powerful — even as the global economy tanks. Read more at The Washington Post.
- Can public policy incentivize staying at home during COVID-19? Read more at Brookings.
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