India, a promising market for financial services from Tech giants

The GAFAs are gradually expanding their presence in India, where they are offering innovative financial services. After Google Pay, which announced a partnership with Indian bank Equitas Small Finance Bank in early September, it was Amazon Pay's turn to launch. Let's take a closer look at this highly promising market for the tech giants.

Sharp rise in online transactions

It's no coincidence that the Internet giants have chosen to enter the Indian market. Indeed, online transactions have been rising steadily, particularly since the Covid-19 crisis.

The India Stack digital infrastructure, which includes a digital identity and biometric system, as well as a payment system called Unified Payments Interface, includes almost 250 Indian banks and is used by Google Pay, Amazon Pay and WhatsApp. In August, the system recorded 3.5 billion transactions worth 74 billion euros.

A potential market of 390 million Internet users

India is now the world's second-largest telephony market behind China, with over 390 million Internet users. With 328 million monthly active users for Facebook and 400 million for WhatsApp, it has overtaken the United States. Instagram, meanwhile, has almost 100 million users.

As a result, it's above all the growth potential of the Indian market that is motivating multinationals, and in particular the margins for growth in e-commerce sales.

Strengthening legislation

The GAFAs are now well established in India, with Amazon investing $7 billion in the territory since 2016. However, the government considers that the development of the American giants is delaying the emergence of local startups.

Several measures are being considered by the Indian government to regain control of its digital sovereignty. In December 2019, the lower house of Parliament tabled a bill aimed at modernizing the legislative arsenal, framing the collection and processing of personal data. This text requires players to collect data only " for a specific purpose " and " not to keep it longer than necessary ". Personal data must be processed in a " fair and reasonable " manner, and Internet users must be informed of their rights, and of the nature and purpose of the data stored.

However, the bill raises a number of criticisms. The expression " fair and reasonable " lacks precision, and leaves it up to the players collecting the data to adopt their own rules. PRS Legislative Research, an Indian non-profit association set up to make the Indian legislative process more transparent, points out in a note that it is to be expected that the latter "will not respect the spirit of the law ".

Other measures on the table include tighter constraints on stock limits for foreign e-commerce companies and a bill to close legal loopholes that could have a heavy impact on tech giants.