Why is Amazon India more successful than Flipkart

Innovative entrepreneurs

Ratan Tata
former CEO of Tata Group

One of the most famous minds in the Indian economy is the now 77-year-old Ratan Tata. The country could hardly have chosen a better ambassador: Although he gave up his post as CEO of the Tata Group three years ago to his successor, Cyrus Mistry, he is still responsible for the charitable activities of the large corporation. That fits into the profile. Because Tata, the company, and Tata, the entrepreneur, have always known how to present themselves as the better capitalists.

Tata is the employer of choice among idealistic college graduates because it has earned a reputation for not being corrupt. And Ratan Tata, who neither smokes nor drinks, who cultivates the image of a patrician in appearance and habitus, embodies this ideal to perfection. That made it so difficult for the British press to attack Tata when he bought the traditional British brand Jaguar Land Rover in 2008, turning colonial history upside down, as it were. Even with Tata, not everything was noble in the beginning.

Like many Parsees (Zoroastrians who immigrated from what is now Iran), founder Jamsetji Tata also benefited from his close cooperation with the British colonial power. He made his fortune selling opium to the Chinese. His company, founded in Bombay in 1868, has grown into a conglomerate over the next 150 years that made around ten billion dollars in profits last year - with automobiles, financial services, telecommunications, retail and chemical industries. There is hardly anything that Tata does not offer, including the “Nano”, the famous $ 1,000 car.

Mukesh Ambani
Chairman of Reliance Industries

According to Forbes, he is the richest man in India; the 58-year-old chairman of Reliance Industries ranks 19th worldwide with private assets of $ 23.6 billion. His brother Anil, who heads the Reliance ADA Group, has private assets of $ 5.9 billion. If the two brothers hadn't fallen out, the company founded by their father Dhirubhai Ambani in 1966 would certainly be number one in the Indian economy today. Mukesh Ambani took over the industrial core of the company (energy, petrochemicals, textiles); his brother's empire includes entertainment, telecommunications, and financial services.

In the 1970s, the Ambani family lived in a two-room apartment in Bombay and their father expanded his modest yarn trade into the largest manufacturer of polyester fibers. Today his son Mukesh owns the most expensive residential building in the world after Buckingham Palace, the Antilia Building in Mumbai. But more interesting than the incredible wealth is the phenomenal rise of the family. Critics accuse Dhirubhai Ambani that his success is based not least on his skillful manipulation of politicians and stock markets. His biographer Hamish McDonald is of the opinion that he only used the possibilities of a system that put unnecessary bureaucratic shackles on entrepreneurs until the end of the 1980s. Aroun Shourie, a former minister of the ruling Bharatiya Janata Party (BJP), who heavily criticized the Ambanis during his time as a journalist, sees it similarly today: “They (the Ambanis) have built world-class factories despite these regulations. By crossing boundaries, they showed the need to abandon them. You fought for reforms. "

Mukesh Ambani, who was added to the board by his father at the age of 18, is continuing this legacy and expanding Reliance Industries into a conglomerate that, in addition to the oil refinery and a petrochemical complex in Jamnagar, also operates hundreds of supermarkets and the entire agricultural value chain from the farmer served to the consumer.

The discovery of a gigantic gas field in 2002 promised to make Reliance one of the largest energy companies in the world. But fierce political controversies overshadow gas production to this day. "The main obstacle to attracting foreign investment (in India) is not geology, but politics and regulations," the Economist sums up the controversy. "The country combines the worst of both worlds: bean counting, everyday nodding and long-term insecurity."

But for Mukesh Ambani this is not an obstacle. He once said of his humble childhood: “What I've really learned is never to give up. You are never successful at the first attempt. "

Nandan Nilekani
Founder of the IT giant Infosys

The 60-year-old Nandan Nilekani, founder of the Indian IT giant Infosys, once compared Mukesh Ambani to legendary industrialists like John Rockefeller and Andrew Carnegie in the New York Times: “Rockefeller and Carnegie only changed one industry. But he's changing three or four industries. "

Together with Narayanan Murthy (69 years old), Nilekani is one of the fathers of the Indian IT industry and is himself one of the makers who have changed an industry. Outsourcing became the basis of the Indian IT miracle with the company Infosys, founded by the two (and five other men) in 1981. Infosys was the first Indian company to be listed on the Nasdaq in 1999. While Tata represents the traditional upper class and the Ambanis the rise from small backgrounds, Nilekani and Murthy are entrepreneurs who come from the middle class.

The two engineers discovered software development for themselves early on and saw the potential it had for India. In his book “Imagining India. The Idea of ​​a Renewed Nation “Nilekani presented his idea for an India of the 21st century, liberated from the rest socialism of its founding father Jawaharlal Nehru, treading the path of a market economy and democracy. In 2009 Nilekani went into politics. Under the then Prime Minister Manmohan Singh, a doctorate in economics and a former employee of the International Monetary Fund, he headed the “Unique Identification Authority of India”, which was supposed to introduce a biometric identity card for all citizens. In 2014 Nilekani ran unsuccessfully for parliament in New Delhi on a ticket from the Congress Party.

Azim Premji
Board member of the IT forge Wipro and Philantrop

As everywhere in the world, the IT industry and other new technologies were open to newcomers and outsiders. For example Azim Premji (70 years old), director of the IT forge Wipro. His father, a successful Muslim businessman from Bombay, declined Mohammad Ali Jinnah's invitation to go to Pakistan after the partition of British India in 1947. His son, who had studied engineering at Stanford, converted his father's food and soap factory into a computer manufacturer and later into a software company in the 1980s.

Premji, who headed the Forbes list as India's richest man from 1999 to 2005, took a path early on that is still relatively unusual in India. He established himself as a philanthropist. His "Azim Premji Foundation" is committed to improving primary education and in 2010 made two billion dollars available for this purpose. At the "Azim Premji University" his company attracts the next generation. By its own account, Premji has so far spent 39 percent of its private wealth on charitable projects.

Kiran Mazumdar-Shaw
the trained master brewer is the founder and director of the biotechnology company Biocon

Women have also seized the opportunities that the rapid change in India has offered them. One of the most important entrepreneurs is Kiran Mazumdar-Shaw (62 years old), director of the biotechnology company Biocon from Bangalore. Like Nilekani and Premji with a solid middle-class background, she first studied biology and then, on the advice of her father, was the first woman in India to be trained as a master brewer in 1974. Her father was the head brewer at "United Breweries", the maker of the popular Kingfisher beer. But that was too far ahead of her time. Her application was rejected on the grounds that brewing is “a man's job”.

Kiran Mazumdar became a master brewer in Scotland and thought about it. When the company Biocon Biochemicals, a manufacturer of enzymes for the brewery and food industry, was looking for an Indian entrepreneur to establish a presence on the subcontinent, they took it. She started Biocon India in 1978 in the garage with a starting capital of only 10,000 rupees (approx. 1,250 dollars). The obstacles were immense: she was young and a woman, and India was difficult terrain for biotechnology. Power outages plagued the start-up as well as the lack of clean water, sterile laboratories and qualified employees.

But within a year Biocon was able to produce enzymes and was the first Indian company to export them to the USA and Europe. Since then, Biocon India has blossomed from an enzyme manufacturer into a biopharmaceutical company whose focus, like many pharmaceutical companies in India, is on the development and production of inexpensive drugs for developing countries.

Chanda Kochhar
CEO and Managing Director of the ICICI Bank

It does not seem to be a coincidence that Biocon India's first major expansion came about in 1987 with the support of ICICI Bank. Because this bank has had women at the top since 1971. Today women in leadership positions in Indian banking are no longer an exception; But that is also a result of the business policy of the ICICI-Bank: three of the five board members are women and 13 of 40 top managers. The 53-year-old Chanda Kochhar has been CEO and Managing Director there since 2009. Time magazine named the Rajasthani woman in the list of "100 Most Influential People in the World" this year. “We are one of the largest Indian banks and have become a role model in a certain way,” says Chanda Kochhar. Anshu Jain, ex-CEO of Deutsche Bank, describes Chanda Kochhar as a “first-class leader and strategist”.

Raghuram Rajan
Head of the Central Bank of India

Raghuram Rajan (52), head of the Reserve Bank of India, the central bank, is currently more influential than the top banker. What he says may not be a law, but it regularly makes headlines in the business media. Early on, he criticized Prime Minister Narendra Modi's “Make in India” campaign and instead suggested the motto “Make for India”. The former chief economist of the IMF is convinced that, given the current weak global growth, India should not focus primarily on exports, but on expanding the domestic market.

Recently he also criticized the national tendency to muddle through and improvisation (“Jugaad”): “We must have the discipline to build the necessary institutions and create a new path to sustainable growth on which Jugaad is no longer necessary”. And it doesn't take much imagination to know that this recommendation is addressed to the government.

The man from Bhopal, who many consider the best central banker in the world, like many middle-class Indians, first studied engineering. He is currently on leave from his position as Professor of Public Finance at the University of Chicago. There are quite a few in Asia who are campaigning for him to succeed Christine Lagarde as head of the IMF in 2016.

Lakshmi Mittal
Chairman of the board of the largest steel company in the world, ArcelorMittal

Like many Indians, the central banker Raghuram Rajan took the decisive steps of his career abroad; many of these emigrants are currently returning home. Like Lakshmi Mittal (65). The CEO of the largest steel company in the world, ArcelorMittal, has made an unprecedented rise that, as in the case of the Ambanis, was shaped by the restrictions of the License-Raj. Because of the restrictions on steel production in India, he took over a run-down steel mill in Indonesia at the age of 26 in 1976. Acquisitions all over the world followed, including the huge state-owned Karmet plant in Kazakhstan and the Hamburg steelworks. He acquired the French group Arcelor in 2007 through a hostile takeover. Mittal now lives near Kensington Palace in London. His daughter's wedding, which was celebrated in the Palace of Versailles in 2004, made headlines.

Sachin Bansal
Founder of the online retailer Flipkart

This kind of emerging attitude is rather alien to the new generation of Indian entrepreneurs; they look less to the west. The 34-year-old Sachin Bansal, founder of the online retailer Flipkart, replied to the question of whether Flipkart wanted to become the “Amazon” of India: “No, we will be the Flipkart of India.” In India there were other challenges, and one could at all learn a lot more from Chinese companies like Alibaba.

But he and his business partner Binny Bansal didn't grow up in dusty villages either, but in the tidy city of Chandigarh in northwest India. Then they studied computer science at the renowned Indian Institute of Technology (IIT) in Delhi and worked for Amazon. In just six years, they made Flipkart India's best-known online retailer. Your “Cash-on-Delivery” payment model is now being copied everywhere. In 2013, the Business Times named Sachin Bansal Entrepreneur of the Year because he “exceeded everyone else in terms of innovation”.

Bhavish Aggarwal and Ankit Bhati
Founder of the taxi service Ola

Bhavish Aggarwal (29, pictured) and Ankit Bhati (28), the founders of Ola, one of the fastest growing Indian companies, have a background similar to that of the two bansals. They studied at the IIT in Mumbai and worked for Microsoft for a while before they launched the innovative taxi service that takes reservations via web browsers or mobile apps. Just like that of the competitor “Uber”, the concept is characteristic of the digital economy and it is not surprising that it was developed by two young “digital natives”.

Because Ola does not own any vehicles of its own and has no employed drivers, the start-up was able to avoid high investment costs as well as the complicated Indian labor law and questions of approval and regulation. According to himself, Bhavish Aggarwal got the idea because he had a negative experience with a taxi driver who asked him more money in the middle of the way and abandoned the passenger on the open road when he refused to pay. Aggarwal does not own a car because he “wants to lead by example” in a country that is currently in danger of being choked on car traffic. This is the sound of a new generation.

Britta Petersen is a Senior Fellow at the Observer Research Foundation (ORF) in New Delhi.