Vivatech, one of the largest digital and start-up events is a global tech event which saw attendance by European leaders like the President of France ‘Emmanuel Macron’, the Prime Minister of Spain Pedro Sanchez as well as a number of European MPs. Prime Minister Modi delivered the keynote address as the ‘Guest of Honour’ at the fifth edition of Vivatech which occurred between the 16th-19th June 2021. Vivatech is one Europe’s largest digital and start-up events which sees participation from global technology innovators and start-up leaders. Prime Minister Modi delivered the keynote address via video conferencing.

Takeaways for start-ups

The Government has issued open invitations for foreign investors in Indian start-ups that foster talent, cater to a thriving market, belong to a robust ecosystem and are open for new opportunities.

Modi placed India’s tech-talent pool on an international podium and highlighted how Indian tech solutions created by the youth of the country are deployed for critical use cases across the world.

He also put forward the vast digital market in India. He stated that the Indian mobile phone consumer base and the Internet user base currently stands at 1.18 B and 775 M respectively which are numbers greater than the population of several nations. Further, the Prime Minister stated that Data Consumption and Social Media consumption in India is the highest from a global standpoint. He said data usage is the cheapest here than anywhere else in the world. He also went on to invite participants into this market which he called ‘diverse and extensive’.

The Indian start-up community was called upon to address the current global challenges through a collective spirit and a human centric approach. Start-ups were called to take the lead, especially the youngsters within the community. The advantage they enjoyed of not being burdened from their past is set to assist them in bringing about global transformation. Start-ups have been called upon to explore sectors like healthcare, eco-friendly technology like waste recycling, agriculture, and new-age learning tools (ed-tech start-ups can rise to the occasion)

India was presented as an open society and economy to the attendees of the Vivatech summit. It was also presented as a nation committed to the international system. It was stressed during the keynote address that ‘partnerships’ are exceptionally important to India. Digital partnerships especially between Indian start-ups and European nations is a key priority to India. On a final note, new technology was called upon to serve a large purpose and humanity in general, especially through these partnerships.

Prime Minister Narendra Modi made a strong pitch for privatisation of public sector enterprises (PSUs), asserting that the “government has no business to be in business”. Addressing a webinar on privatisation by the Department of Investment and Public Asset Management, Prime Minister Modi said that several PSUs in the country were facing losses and needed public money to survive. He said, “PSUs should not be kept running just because they have been running, because they have been somebody’s pet project.”

The idea of privatisation or disinvestment is not new. Rather, it has been a matter of heated debate, especially in the banking sector, whether to and to what extent allow the private sector to enter the space. How will the government’s  “no business” in business impact India Inc.?

Let the Bidding Begin: Will Large Business Houses Outbid All? 

Reserve Bank of India (RBI) allows business houses that don’t have more than a certain fraction of their business in non-financial enterprises to apply for a bank licence. This means that the aim of bringing in managerial capabilities into public sector banks is already fulfilled. Then why not continue the same and encourage more of these houses to apply for a licence?

Why does the government want to completely privatise banking? Now, let us assume that the process of allotting licenses will be completely fair. Somehow large business houses some may say “well-connected” that already have an initial investment capital will hold an ‘undue’ advantage and will be able to push for the license easily. Can RBI play out fair in terms of license allocation? The RBI is no doubt an autonomous and independent body however not to forget government is sovereign. One such past experience was that of Muthoot Finance who has been eying on a bank license for a long time now. The RBI had also recently turned down Muthoot Finance proposal to acquire IDBI Bank’s mutual fund business.

But if big industrial houses and pubic financial services companies, for instance here Muthoot Finance with an operation income of US$1 Billion are not allowed to bid, who will? Let’s have a look at potential bidders: First are the private sector banks whose finances are already under strain. Second are big foreign banks who may play strong in the bidding process and take over stakes as they have been prying to capture the market share for long. Third are NBFCs, majority of which are, again, run by industrial houses (Mahindra Finance, L&T Finance).