Mukesh Ambani who makes its fortunes from oil and petrochemical industries are now in news for his new ambitions to shift towards digital sectors with the help of his new deal with Google and Facebook. Indians are becoming more addicted to digital services like shopping and wallets. Nobody wants to lose their phones and wallets! They have become the basic necessities of people. Therefore, India’s Richest man, Mukesh Ambani wants to control the phones and wallets of billion-plus consumers.
While the digital retails startup JioMart requires the use of mobile devices, the retail chain requires the company to get hold of the consumer’s money bags. This is known as the twin-track strategy. The big jump in the digital services cushions the Reliance industry to blow in Covid-19, on the other hand, it has badly hit the oil and petrochemical industries. However, for the energy industry, it is shadowy for the long term.
The Indian domestic retail sector is unstable since March due to the sudden national lockdown, which majorly affected the supply chain. In the meantime, various companies are moving towards digital technologies. The two areas of digital and retail brought earnings in excess of $1 billion in the last quarter. The remarking of the Reliance has been watched by both Silicon Valley and Wall Street. It is amazing how Ambani’s Jio Platforms able to raise their funds for about $20 billion from tech giants like Facebook and Alphabet, making Jio – the most ambitious digital services.
Reliance has taken various steps from entertainment, education, and healthcare to 5G services. Jio’s subscriber base is over 400 million. Commerce with Jio will only be successful with the help of Facebook’s WhatsApp payment system, as customers spent around six hours online available at social platforms, and with the help of the WhatsApp database. This will help Jio to extend its reach. But there is still a large range of people who do not have access to internet connections and mobile phone. To dominate more deliberate purchases, Ambani will need to go offline over the 29 million square feet of retail space.
On the other hand, the fifth of the Reliance Retails’ revenue comes from food and grocery which is low-margin but successful. However, it requires extra care to intricate from farms to the supply chain in the country where transportation and storage are the big challenges.
Reliance was only able to draw such a huge amount of funds because of his alliances with Prime Minister Narendra Modi. While Modi is in desperate need of a success story to repair some of the economic damage caused by the pandemic, other private sector balance sheets with the heft to give expressions to his rhetoric of self-reliance whose major goal is to reduce Chinese-made goods. Meanwhile, other large business groups are also facing tough times. For instance, Anil Ambani – Mukesh Ambani’s younger brother who is sinking in unsustainable leverage.
As the U.S.- China relationship is on the breakdown, the west needs proof on the concept that India can provide international investment opportunity as an alternative to China. They want the results today, not after five years when COVID impact had worn off. That is what Ambani is trying to do! He is promising to provide such opportunities by extending his power over the phones and wallets of the people.
Ambani is helping the government to increase the amount of FDI (Foreign Direct Investment), which will help to improve the GDP as the government revenue is under pressure amid the economic slowdown. According to the World Investment Report 2020 by the UNCTAD, said that India was the 9th largest recipient of FDI in 2019 with $51 billion dollars.
Let’s see how Foreign Investments helps to boost the Indian economy!
Well, creating jobs is the most obvious advantage of FDI. Also, it is one of the most important reasons why a nation like India – a developing country, wants to attract international investors. The increase in investments means the increase in manufacturing and service sectors which in turn brings the job opportunity. Another advantage is the development of backward areas. It enables the transformation of backward areas in a country to the industrial sectors.
The country gets access to the latest financial tools, technologies, and latest practices across the world. It also helps to boost exports for global consumption. Another important advantage is the source for external capital and revenue generation for the country – which India is in a desperate need for now. This helps to create factories that bring employment and after the completion, the same factories help to create additional tax benefits for the government. The inflow of capital creates an opportunity to raise funds in global capital markets.
Now, India is setting to rebound the FDI post-COVID-19, despite the negative short-term shocks from the pandemic. The options of Foreign Investments are still buoyant in India. There are various investments by technology firms during the first seven months of 2020 by USD 17 billion excluding the Google investment of USD 10 billion in mid-July. And, India is still working on more investment techniques to boost the economy, in which Ambani is helping with open arms!