Look at how we have treated two recent arrivals to our shores. Look first at Amazon, which plans to invest $2 billion in India. Are we pleased? Ha. We are suspicious. People don't just invest that sort of money, we think. They're up to something. And so, first of all, we ensure that they cannot sell directly to users. This country is the only place in the world where Amazon is not Amazon, but eBay. It is primarily a marketplace, not a retailer.
OK, fine. At least they're getting to operate. But then last week came news that the Karnataka tax department discovered that it didn't like one of their innovations. You see, Amazon tries to save its resellers time by predicting what people will order and storing it for the resellers. In other words, it takes over inventory management costs, and resellers pay a fee for that privilege. Amazon's a big company, and it can handle the risk better; consumers get things cheaper and quicker; everyone benefits. For any Indian government, such optimality is an unsupportable insult.
So the Karnataka tax department announced that this business model was impermissible, that third-party sellers were actually selling to Amazon, not using its facilities. The upshot was that Amazon was left with an empty warehouse in Karnataka. This has further energised the central government's enforcement directorate in Delhi, which was already convinced that Amazon is trying to subvert traditional Indian principles and sneakily sell stuff cheap to consumers.
This xenophobic infection has not just caught the traditional arms of the government, though it is pretty bad there. It seems to be worst of all at the commerce ministry, busy working out how to protect us from foreign non-veg. India has already become the first country to ban foie gras, after a series of marathon meetings. (No time to work out how to save the Bali deal, but lots of time for this.) And have you tried ordering the baby back pork ribs at the new Chili's in Saket recently? They can't give it to you. They claim many such imports are being held up thanks to a new government regulation that requires them to prominently state on their packaging whether they're non-veg or not. Since, you know, you can't identify a rack of ribs as meat unless it there's a red dot on the packet.
Xenophobia makes you stupid. It enhances the Indian government's tendency to think that there is nothing more immutable than procedure, even though the procedures are usually out-of-date, arbitrary, internally contradictory, technophobic, and off-handedly written between tea breaks by the very same guy who is now claiming "What can I do, I can't change procedure."
This has spread even to such places as the Reserve Bank of India (RBI). The RBI, headed at the moment by the very smart Raghuram Rajan, has taken time off from battling inflation and restoring growth to far more vital task of shutting down Uber.
Yes, Uber, the little app you can download to your phone so that you can get a cab wherever and whenever.
Uber creates a bridge between cell phone users and free taxi drivers close by. Once done, you touch your phone, and your credit card - details for which you've entered earlier - is instantly charged. This makes life much easier all round. It is a hit, therefore, in over 40 countries around the world. Only in India, out of those dozens of countries, is its payment mechanism a problem.
The RBI, a few years ago, discovered that e-commerce existed. This did not meet with their approval. So they put various draconian restrictions on credit cards. This is why, if you have most Indian banks' cards, you cannot use them to pay for The New York Times or The Economist. Google Play, also, is considered an "unsafe website" by some banks who are desperately and confusedly trying to follow the RBI's series of panicked notifications.
The other way the RBI tried to control people buying things online was "two-step authentication", in which a password was needed beside the card details. One way to get the password? A new one could be generated every time you try to pay and sent to your phone. Only foreign websites (like Uber) were exempt.
Now Uber's competitors, Meru and EasyCab, are furious that their customers are willing to step out with this young foreigner even though their lives are so much better thereby. They wrote to mummy RBI to complain about Uber. Where Amazon was accused of being the seller and not the marketplace, Uber was accused of being the marketplace and not the seller.
Indian regulators should crumple up angry letters from business rivals and throw them into the dustbin unread. The RBI not only did not do that, it approved, and told Uber to follow two-step authentication, in a notification that was visibly aggressive.
OK, how dumb is this? Think about it. When your card issuer sends you a one-time password, as the RBI requires, what is the origin of the additional security? That's right, the fact that you have your phone with you. But if you are using Uber, you already have your phone with you, don't you? So what does this additional security amount to, exactly?
Even Rajan, a man who wrote one of the most reformist government reports in history, has defended this crazy behaviour. He told Mint: "If there is a rule in the book, we don't want it to be violated just because the innovation is cool". OK, boss. Then change the stupid rule, one your guys arbitrarily came up with anyway! Or is reform no longer an option once you become part of the government?
mihir.sharma@bsmail.in