Also in the letter:
■ Festive fever may light up ecommerce sales by 16%
■ Nithin Kamath pegs Zerodha’s valuation at $3.6 billion
■ IAMAI taskforce to tackle Google Play Billing issue
MeitY defers plans to form gaming self regulator; seeks common ground
The Ministry of Electronics and IT (MeitY) has postponed the formation of an SRB for the gaming industry, and is waiting for various ministries including law, finance and home to get on the same page before proceeding with it, senior government officials told ET.
Harmony within govt: The discussion points among various arms of the government include the SRB framework that is evolving, the legacy view that gaming companies are not complying with tax laws or paying taxes, and the security issues involved with the presence of several Chinese companies in the sector. “All of that has to be harmonised,” one official said.
Word for word: “There is a discussion between the ministries that harmonisation should happen and everybody (should) be on the same platform before we go ahead,” said one of the officials aware of the discussions.
Crisis within industry: The IT ministry is also awaiting clarification from its finance counterparts before proceeding with this. The gaming sector is under strain with the government’s decision to impose 28% GST on real money gaming companies. Some including Dream11 and Play Games24x7 have received notices demanding GST dues totalling Rs 55,000 crore, ET had reported.
“There must be some rationale to why they (finance ministry) have demanded the tax (retrospectively). We will wait for their clarification,” an official said.
What are SRBs? SRBs were to be formed with industry representatives as members. SRB as a concept was first proposed in the amended Information Technology Rules for gaming companies in 2023. The IT ministry had proposed more than one SRB which would be empowered to decide on the issue of permissible and non-permissible gaming companies in India.
Consumer internet companies levy per-order charges to up margins
Generating a fixed amount of cash on every transaction is increasingly becoming the name of the game. More consumer-focussed platforms are joining the bandwagon of levying a flat fee on every order or booking to improve unit-level economics.
Making a beeline: Ride-hailing firm Uber and Tata-owned BigBasket’s quick commerce platform BB Now are the latest ones to start imposing an additional fee, joining the likes of Zomato, Blinkit, Swiggy and Zepto. While Uber is charging a distance-based ‘booking fee’ that scales along with the kilometres clocked on a ride, BB Now is levying a flat Rs 5 handling charge.
Why the fee? As things stand, companies are unable to increase their commissions from drivers or restaurant partners without causing a stir. They are therefore trying to push up their margins by driving up earnings from the consumer side.
Quote, unquote: “Handling charges, or similar charges, are now standard in the quick grocery industry. Quick grocery services are meant to provide exceptional convenience to customers; we believe that for this to be financially sustainable in the long term, we need to have a charge structure that reflects the cost of providing this convenience, hence the handling charges,” Big Basket COO TR Balakumar told ETtech.
Also read | Myntra experiments with tweaks in returns policy ahead of festive season
Festive fever may light up ecommerce sales by 16%
In what is probably their last big chance to shore up numbers, ecommerce platforms and major brands are gearing up for robust sales this festive season, after a relatively muted first half. Ecommerce sales in terms of gross merchandise value are likely to grow 16% this year, analysts said.
Timing is (almost) everything: On Thursday, Flipkart said its annual mega sale, Big Billion Days, will start on October 8. This led to rival Amazon advancing the start of its own event, The Great Indian Festival, from October 10 to October 8.
Premium play: Premiumisation, where buyers go for more expensive options or upgrade existing assets, will be a major trend across categories like electronics, beauty & personal care, home & general merchandise, and fashion, as told to ET by sellers, ecommerce executives, and analysts.
New buyers: A large number of young buyers in their late teens are set to enter the ecommerce ecosystem this year. A good amount of overall ecommerce sales will also be driven by smaller towns deeper in the hinterland, say ecommerce executives and analysts.
Ready to roll: Multiple sellers who spoke to ET said they had finished preparations for the festive sales by the last week of September itself, anticipating changes in the dates by ecommerce platforms. Over the past few years, it has been common for platforms to change sale dates at the last minute, trying to outsmart each other.
Also read | This festive season, bigger e-commerce sales set to light up volumes
Zerodha’s Nithin Kamath pegs stock broking firm’s valuation at $3.6 billion
Zerodha has valued itself at $3.6 billion, just days after announcing its financial results for FY23. The online stock broker has estimated the valuation on the basis of 10-15 times its profit after tax.
Why this number? According to chief executive officer Nithin Kamath, the company can grow at a long term average of 10-15%. Given its size and the business restrictions the leadership operates within, Kamath said a 10-15% growth rate is achievable.
The rationale: Kamath has been publicly disclosing valuation figures for Zerodha in the last few years now. This is mainly to validate the firm’s employee share buyback programme. Back in 2020, Zerodha valued itself at $1 billion, and in the subsequent year at $2 billion.
Peers: Groww, which is close to overtaking Zerodha in terms of active investors on the platform, was valued at $ 3 billion when it raised $251 million in 2021.
Digital India Bill may help users seek algorithmic accountability
The upcoming Digital India Bill (DIB) is likely to introduce provisions that seek algorithmic accountability from internet intermediaries and social media companies towards users, sources told ET.
But what does this mean? An early draft of the bill proposes that all internet users shall be “informed of a significant technological decision made or proposed to be made by an intermediary through a technological decisionmaking process”. This essentially means that any decision based on an algorithm, proprietary or otherwise, made by an internet or social media intermediary, must be explained to the user, with a “rationale” behind the decision, another source said.
Accountability a must: “It is important for people not just to know how their data is processed by companies but also the process involved in the processing of such data. There must be algorithmic accountability and users must know what or how the algorithm functions,” a senior government official said.
IAMAI taskforce to tackle Google Play Billing issue
Several Indian companies and startups have come together to constitute a 40-member taskforce to take on Google — specifically the Google Play Billing System (GPBS), people aware of the development told ET.
Members: The task force has representatives like the founders of Matrimony.com (which had filed the first antitrust petition against Google in India) and Anupam Mittal of Shaadi.com. It has been constituted under the aegis of tech industry body Internet and Mobile Association of India (IAMAI). This is the first time such a taskforce has been set up to decide the course of action against Google Play.
Other Top Stories By Our Reporters
Cognizant appoints Wipro executive Jatin Dalal as CFO: Dalal, who resigned from Wipro last week, will be serving his notice period as CFO at the homegrown IT firm till the end of November.
CDIL becomes first Indian company to make Silicon Carbide devices: Continental Device India Private Limited (CDIL) became the first in India to manufacture silicon carbide devices with the establishment of its Surface Mount Semiconductor Packaging Line with an investment of around Rs 30 crore at their Mohali plant on Thursday.
Saregama to acquire Pocket Aces, valuing digital content startup at Rs 334 crore: Indian music label Saregama will acquire a 52% stake in Mumbai-based digital content producer Pocket Aces for Rs 174 crore in an all-cash deal, valuing the startup at Rs 334.6 crore, according to a stock exchange filing.
(Left to Right) Third Wave Coffee founders: Sushant Goel, Ayush Bathwal and Anirudh Sharma
Third Wave Coffee raises $35 million in funding round led by Creaegis: Third Wave Coffee cofounder and chief executive Sushant Goel confirmed the new funding without providing any details. Creaegis closed a $426 million fund on September 20 through which it has made the investment in the coffee chain.
Global Picks We Are Reading
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