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Monopoly of large tech firms hindering evolution of entrepreneurship, startups in India: Report

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Monopoly of large tech firms hindering evolution of entrepreneurship, startups in India: Report

To encourage entrepreneurship, the report said it is crucial to advocate for transparency, fairness, and open competition.
he proposed bill aims to limit the anti-competitive actions of big tech firms, fostering a more balanced and competitive digital landscape in India. (Image: pexels)

The monopoly of large technology companies in India, with control over user data, financial power, and opaque algorithms, is among the limitations hindering the democratisation of entrepreneurship in the country, said a KPMG report on Wednesday. Democratising entrepreneurship, according to the report, is a critical concept for fostering an inclusive and diverse startup ecosystem in India. 

The approach essentially focuses on creating equal opportunities for individuals from various backgrounds, regardless of gender, socioeconomic status, or geographic location, to engage in entrepreneurial activities. 

“Their dual role creates a biased competitive environment, suppressing startup growth and fair competition,” the report stated. 

To encourage entrepreneurship, the report said it is crucial to advocate for transparency, fairness, and open competition.Importantly, in May 2024, 40 Indian startups supported the draft Digital Competition Bill, urging the government to fast-track it and modify Systematically Significant Digital Enterprises (SSDEs) thresholds to curb the alleged monopolies and anti-competitive practices of large tech companies. 

The proposed bill aims to limit the anti-competitive actions of big tech firms, fostering a more balanced and competitive digital landscape in India. 

The government is currently examining suggestions from various stakeholders including enterprises such as Amazon, Apple India, Swiggy, Zomato, Flipkart, Google, Meta, Twitter, Paytm, etc.; associations including the Confederation of All India Traders (CAIT), National Restaurant Association of India (NRAI), Alliance of Digital India Foundation, India Cellular and Electronics Association, Nasscom, FICCI, Assocham, CII, etc.; and think tanks such as Niti Aayog, Indian Governance and Policy Project, CUTS International, and others.

Consultations took place in March last year, followed by March-May 2024, with the latest round in June this year, Finance Minister Nirmala Sitharaman informed Parliament on December 9. Importantly, the traders’ body CAIT, in November last year, had alleged that quick commerce players such as Zomato-owned Blinkit, Swiggy Instamart, Zepto, etc., are misusing FDI regulations, manipulating the market, and driving small retailers, particularly kirana stores, out of business. 

However, Zepto founder Aadit Palicha had denied CAIT’s allegations that quick commerce companies are hurting kirana store owners. 

Meanwhile, the KPMG report noted other limitations to the democratisation of entrepreneurship such as the digital divide caused by unequal access to tech infrastructure hindering startups’ competitiveness; funding disparities in terms of location, gender and socio-economic status; cultural barriers favouring established careers over entrepreneurship; and challenges faced by startups with Intellectual Property Rights (IPRs) due to the risk of their ideas being claimed by larger firms.

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