India internet is dominated by American technology giants. Facebook’s WhatsApp is the most popular app on phones. Virtually every smartphone runs on Google’s Android system. YouTube is the favorite video platform and Amazon is the No. 2 online retailer.
India’s government will be imposing tough new rules on the technology industry.
China has been able to grow domestic internet giants like Alibaba, Tencent and Baidu by limiting foreign competition.
The proposals will raise the costs for foreign companies. It could deter investments like Walmart’s recent $16 billion deal to buy control of Flipkart, which is India’s leading online retailer.
India wants to grow Technology Giants
In 2017, there were seven Indian companies that made it to 2017’s Fortune 500 list, three are private companies—Reliance Industries, Tata Motors and Rajesh Exports—and none was a technology company.
China has 115 companies in the Fortune 500, featuring technology firms like Alibaba, Tencent Holding, JD.com and Huawei, among others. This success is not only a result of having skilled workers; the integration of China with the global economy has an important role to play.
China has been an important manufacturing hub for a couple of decades, and its workers have been exposed to the processes and management practices employed by major companies. China is moving up the value chain by bringing together its experience in fabrication, its new R&D edge and the latent skills its workers have acquired over the years to build tech giants.
South Korea is the gold standard in R&D spending. They spend 4.3% of GDP purchasing power parity basis. This is more than double China’s ratio.
On a dollars per person level, South Korea nearly matches the US research spending at about $1520 vs $1580 per person.
Higher Education Failures
Indian universities have failed to provide business clusters because of the split with teaching and research. Higher education in India is in a state of disrepair. No Indian university features in the top 200 of the Times Higher Education (THE) World University Rankings 2018, with Indian Institute of Science (IISc), Bangalore slid further into the 251-300 grouping. In contrast, China has two universities in the top 30 and seven in the top 200.