USA TODAY International Edition
Modi fires up Silicon Valley
Visit to U. S. by Indian leader sharpens tech race with China
China may be a Silicon Valley obsession, but India increasingly is in the conversation and may soon displace its Asian neighbor as tech’s next big frontier. The near- future was on full display last week, when India Prime Minister Narendra Modi made a whirlwind tour of the valley, visiting Google, Tesla and Facebook in hopes of deepening ties with the U. S. tech sector. The visit, the first by India’s leader to the West Coast in 33 years, was also economically motivated — stronger bonds with tech’s heavy hitters is crucial if India’s economy is to become a $ 20 trillion “dream” shared by Modi in a Q& A with Facebook CEO Mark Zuckerberg last Sunday.
The digital economy is a prime economic engine in the world’s second- most populous country ( 1.3 billion) and the largest democracy on Earth, and yet so many obstacles litter its path.
Indeed, India is beginning to outperform China for a number of reasons. It recently entered the top- 10 list of countries, based on gross domestic product, for the first time, according to a report from Credit Suisse. ( China was No. 2, after the U. S., in its best showing yet.)
By 2022, India is likely to pass China and become the world’s most populous nation.
“The Facebook of India is Facebook. The Google of India is Google,” says Beerud Sheth, CEO of Teamchat, a communications app with employees in India and the U. S. “In China, those services are banned.”
But India’s financial allure is fraught with risks, warns Ajay Arora, CEO of cybersecurity firm Vera. He says poor infrastructure and corruption hinder the prospects of U. S. companies in India, not to mention thousands of competing companies within that country.
The problems don’t end there. Only one in five Indians have Internet access, ranking the country a desultory 131st in broadband penetration in 2014. Worse, India was 155th in mobile broadband penetration, according to a UNESCO report.
Oh, and one more cautionary statistic: Although consumption accounts for 60% of India’s GDP, says the World Bank, only 1% of its population shops online, according to The Wall Street
Journal.
Comparisons between China and India are often made, and for obvious reasons.
Thousands of start- ups in India and China voraciously compete with one another for dominance in their countries, making it hard for U. S. companies to compete there, says Dennis Yang, CEO of Udemy, an online education marketplace. Only a handful of U. S. companies have succeeded in China — including Kentucky Fried Chicken, Microsoft, Boeing and Intel. There, they benefited from robust infrastructure and a sizzling economy.
But the governments of each country, and their relations with the U. S., tilt the economic scale to India despite its infrastructure woes.
When Modi was elected in 2014, the hope was the pro- business leader would accelerate market reforms to attract foreign capital and grow the economy. Reforms, however, have been slow to take hold because political and social problems continue to plague the country.
Modi has prioritized the modernization of India’s digital infrastructure, with an aim to improve education and consumption to spark an economic revival.
This is where U. S. tech giants could help, including those led by Indian CEOs such as Google’s Sundar Pichai and Microsoft’s Satya Nadella. They see a land of opportunity where the government is open and cyber espionage is not a constant threat, as it is in China.
The appeal is obvious to their companies, Facebook, Apple and others. The Indian Internet market could rise to $ 137 billion by 2020 as Internet access and e- commerce sales soar.