Hike is trying to create a niche in the messenger market, dominated by Facebook's WhatsApp (and by Facebook's integrated Messenger). In January, Hike said it had been downloaded 100 million times - a downloader may not be an active user - and that 95 per cent of its users are in India, and most are under 25 years of age. But Hike is a long way off WhatsApp, which claims to have over 100 million active users in India and over a billion active users worldwide, in 53 languages. Hike offers seven languages and runs 40 billion messages per month, whereas WhatsApp processes over 50 billion messages per day. Hike claims most users deploy it side by side with WhatsApp and it caters to specific Indian needs, much as Tencent's WeChat has built features for the Chinese market. Hike's features include a screen privacy mode, which hides chats and messages (useful if several people use the same handset), the ability to send free SMSes to offline recipients and a file-sharing utility without Internet access. It also offers games and is reportedly looking at mobile-payment solutions.
Despite infrastructural constraints and inadequate policy framework, India is already a large, and fast-growing, e-market, where long-term projections are strong. Internet usage is expected to hit 750 million users by 2020-21, up from about 350 million at present, and e-commerce is expected to grow 300 per cent to over $60 billion equivalent. A young population is happy to use technology. Mobile wallets have over 125 million users and there are 100 million e-shoppers.
But growth will not be smooth since India presents huge issues and challenges. Poor road infrastructure and patchy internet makes logistics difficult and expensive and cuts down the user-base. Per capita income is low. There are crippling policy restrictions, such as a prohibition on discounts, restrictions on FDI investments in multi-brand retail, and a recent proviso that no single online vendor can make over 25 per cent of total sales in a marketplace. In addition, taxation norms for interstate e-commerce deals are unclear, resulting in disputes with excise departments. The impending goods and services tax should simplify tax tangles. But other policy norms deserve review since they appear over-restrictive and impede growth in a sunrise sector. And, of course, basic infrastructure constraints must be addressed since everybody would gain from better roads and faster internet. Investments in the start-up space may have slowed recently. The January-June period saw private equity and venture capital inflows of about $1.7 billion, substantially less than the $3.7 billion invested during July-December 2015. The investment in Hike should be a shot in the arm and it indicates that investors are still prepared to bet on the enormous growth potential of this market.