The local and the global this Diwali

Govt is pushing for buying local and going digital. The contradiction between the two cannot be missed

This Diwali is different not just because there’s no office chatter around boxes of dry fruit and mithai, but for other reasons too. For example, we are not only supposed to be “vocal about local”, but buy local too. We need not limit our local shopping to diyas (earthen lamps), rather we should extend it to all other items that we aspire to buy. The recommendation has come from the prime minister himself. While we do that, we need to keep in mind the significance of going digital in whatever little shopping spree we can afford this extraordinary festival season and  shun cash at all times. This, too, has been emphasised by the top government representatives time and again.

The twin task of buying local and going digital may have been inspired by a common philosophy of national progress, but the contradiction between the two cannot be missed.  

While buying local is meant to grow Indian enterprises in the small and medium sector, the focus on digital payment would promote businesses backed by large global players, including Google, Facebook and Walmart. WhatsApp Pay from the Facebook stable has recently been allowed by the National Payments Corporation of India (NPCI) to start digital payments in phases, starting with 20 million subscribers. With WhatsApp’s messaging service having 400 million-odd users in India, its digital payments success story in the country would be logically extended to other parts of the world.

The potential of the service has been acknowledged by Facebook Chief Executive Mark Zuckerberg himself. “With UPI (Unified Payments Interface), India has created something truly special and is opening up a world of opportunities for micro and small businesses that are the backbone of the Indian economy. India is the first country to do anything like this. I’m glad we were able to support this effort and work together to help achieve a more digital India…,’’ he said in a video post last week. What Zuckerberg did not mention in his post was how the India-based initiative of WhatsApp Pay would grow the business empire of Facebook.            

Among the other foreign majors gaining from India’s focus on digital payments are Google Pay and Flipkart-backed payments service PhonePe. For Flipkart, now majority-owned by US major Walmart, PhonePe with about 170 million users has turned out to be a good bet. Google Pay, which is facing a probe by the Competition Commission of India for alleged violations, has a user base of 70 million. Jeff Bezos-led Amazon Pay also joined the bandwagon recently, making it an all-American play. Then, there’s Alibaba and Softbank-backed Paytm with 250 million-odd users and Reliance Industries’ Jio Payments Bank. Both have banking licences.

The latest numbers show that more than 2.07 billion UPI transactions were processed in October, with PhonePe accounting for as much as 40 per cent of the pie. Google Pay was a close second. In fact, recent estimates by the Reserve Bank of India make it clear why foreign majors are active in the digital payments space, many of them riding on the UPI platform. According to the RBI, payments through digital modes are expected to jump to 1.5 billion transactions, worth Rs 15 trillion a day, in five years. Currently, the daily transactions are at about 100 million on an average and amount to Rs 5 trillion.

UPI, an indigenous real-time payments system developed by the NPCI that was set up a few months ahead of the demonetisation exercise in 2016, is an example of an Indian experiment that has struck the right notes. But it’s the foreign majors that are the key players on the Indian platform, which has enabled the digital payments service in the country. This is not very different from the foreign online marketplace platforms, such as Walmart and Amazon, which are hosting thousands of Indian sellers to do business and reaching out to the remotest pincodes in the country for Diwali sales and otherwise.

In the end, platform owners and the transacting players are in the business together, irrespective of their origin and nationality. When 70 Indian sellers became crorepatis during the Walmart-owned Flipkart Big Billion sale recently, there was celebration. So, when PhonePe, Google Pay, WhatsApp Pay and others script their success stories on the Indian UPI, the celebration can continue.  

While buying local on Diwali and using digital transaction to pay the bills, the context has to remain the same. Ultimately, local, global and glocal merge into one another in business even as we insist on country-of-origin tags for every product to be sold on foreign e-commerce sites, and want Chinese lights and gadgets out of the Diwali scene.