Google to invest $10 billion in India, will use money to up digital stake
Google said on Monday that it plans to invest $10 billion in India over next five to seven years as the search giant looks to help accelerate adoption of digital services in the key overseas market.
Sundar Pichai, chief executive of Google, today unveiled Google for India Digitization Fund through which the company will be making investments in the country.
“We’ll do this through a mix of equity investments, partnerships, and operational, infrastructure and ecosystem investments. This is a reflection of our confidence in the future of India and its digital economy,” he said via video conference at the company’s annual event focused on India.
Investments will focus on four areas:
First, enabling affordable access and information for every Indian in their own language, whether it’s Hindi, Tamil, Punjabi or any other
Second, building new products and services that are deeply relevant to India’s unique needs
Third, empowering businesses as they continue to embark on their digital transformation
Fourth, leveraging technology and AI for social good, in areas like health, education and agriculture
India is a key overseas market for Google, where a range of its products and services, including Search, YouTube and Android, have made inroads with much of the entire online population. The nation of 1.3 billion people has emerged as perhaps the last great untapped growth market for American and Chinese giants. More than 500 million people in India are online today and over 450 million smartphones are in active use in the country. “There’s still more work to do in order to make the internet affordable and useful for a billion Indians…from improving voice input and computing for all of India’s languages, to inspiring and supporting a whole new generation of entrepreneurs,” said India-born Pichai.
Google, like every other American tech giant, makes only a fraction of its revenue from the world’s largest internet market. But that does not appear to be a priority for any American or Chinese tech giant in India that is currently searching for the next hundreds of millions of users in developing markets.
Facebook, which rivals Google and Amazon in India, made a $5.7 billion investment in Reliance Jio Platforms, the top telecom operator in the nation, in April this year to digitize 60 million mom and pop stores in the country.
Reliance Jio Platforms, a four-year-old subsidiary of India’s most valued firm Reliance Industries, has raised more than $15.7 billion since the second half of April from 12 high-profile investors. During his visit to India early this year, Amazon founder and chief executive Jeff Bezos said the e-commerce giant was ploughing an additional $1 billion into India, totaling the company’s to-date commitment to $6.5 billion.
Google’s announcement today also comes at a time when India appears to be shutting its door to Chinese firms. New Delhi last month banned 59 apps and services developed by Chinese companies. Among those that have been banned include ByteDance’s TikTok, Alibaba Group’s UC Browser and Tencent’s WeChat. Some industry players believe that this ban would help American tech giants further expand their tentacles across India as they face less competition.
In April this year, Prime Minister Narendra Modi’s government also amended its foreign direct investment policy to require all neighboring nations, including China, with which it shares a boundary to seek approval from New Delhi for their future deals in the country.
For dozens of Indian unicorn startups in India, including unicorns Zomato, Swiggy and Paytm, that count Chinese investors as some of their biggest backers, New Delhi’s move is likely to result in additional difficulties in raising future capital. Gaining foothold in India has also become more crucial for American technology giants that have been largely shut out from doing business in China. Earlier this month, Google said it had abandoned plans to offer a new cloud service in the world’s largest internet market.
Ravi Shankar Prasad, India’s electronics and information technology minister, said that Google was “rising to the occasion by trying to invest a fairly substantial amount in India’s digital transformation. “I’m very happy that Google is recognising India’s digital innovation and the need to create further opportunity,” he said.
Google has backed a handful of startups in India to date, including Bangalore-headquartered hyperlocal delivery service Dunzo. In May, Financial Times reported that Google was in talks with Vodafone Idea, the second biggest telecom operator in India, to acquire a 5% stake in the company.
Sanjay Gupta, the head of Google in India, said the company’s new $10 billion commitment to India today would shape the future of many of its products and services in the country. “We are recommitting ourselves to partner deeply and support India in becoming a truly digital nation,” he said. One of the ways Google, which began operations in India in 2004, has extended its reach in the country is through partnerships with local smartphone vendors to produce and sell low-cost handsets that receive timely and more frequent software updates.
Without disclosing many details, Caesar Sengupta, GM & VP of Payments and Next Billion Users at Google, said today that the company will focus on “enabling more high-quality low-cost smartphones so that more people can access the internet to learn, grow and succeed.”