Why Silicon Valley Giants Are Reliant On One Man To Find Success In India

India’s richest man Mukesh Ambani plays a crucial role in U.S. tech giants including Facebook Inc. FB and Alphabet Inc. GOOG GOOGL unit Google finding success in India, according to a report by CNN.

What Happened: Ambani has been making intense efforts to turn his Reliance Industries, traditionally an oil-to-chemicals business, into a company that focuses on the tech, renewable energy and retail segments. As part of those efforts, the company currently has a new technology subsidiary called Jio Platforms, which acts as a holding company for the Jio mobile network and other digital businesses of Reliance.

Silicon Valley Backing: Jio Platforms has attracted immense interest from Silicon Valley tech giants including Facebook, Google, Intel Corp. INTC and Qualcomm Inc. QCOM as well as U.S. private equity firms that have invested a combined $27 billion in the company.

Similarly, Reliance’s retail business has also attracted investments from U.S. private equity companies such as Silver Lake, General Atlantic and TPG Capital that are already Jio investors.

Political Backing: Ambani has long been a vocal supporter of India's Prime Minister Narendra Modi and the ties between the two go far before Modi was elected as the country's apex administrator.

Economist Rupa Subramanya noted in a piece — critical of Modi's relationship with Ambani and other noted Indian billionaires — for Nikkei Asia that Ambani's favorable relations with lawmakers could be a reason why Google and Facebook are choosing to back Reliance rather than make more direct forays in the country.

CNN too noted that India's richest person and his companies have been a beneficiary of regulations that have created barriers to Silicon Valley companies' ventures in the country.

Fierce Competition With Rivals: Ambani has now taken on e-commerce giants such as Amazon.com Inc. AMZN and Walmart Inc.’s WMT Indian unit Flipkart, which dominate online shopping in India, with the launch of JioMart in 2019. Reliance Retail is engaged in a tussle with Amazon over local retailer Future Group’s $3.4 billion sale of its retail assets to Reliance.

See Also: Walmart’s Indian Unit Expands E-Commerce Footprint In Challenge To Amazon

Tesla Inc. TSLA CEO Elon Musk could face a stiff challenge from Ambani as Tesla plans to set up an electric car manufacturing unit in the South Asian nation. Ambani has reportedly said he will make batteries for electric vehicles in India as he expects to capitalize on an expected boom in the EV segment in the country.

Also Read: From EV Batteries to Pod Taxis: India’s Richest Man Seems To Prepare For The Elon Musk Challenge

A Lucrative Market: India’s huge online population of 750 million, second only to China’s, is a huge draw for U.S. tech giants. However, the global tech companies are facing stiff regulatory hurdles in India and have found it difficult to crack open the market.

Nevertheless, the investments in Ambani’s companies have enabled the American companies to gain a foothold in the lucrative Indian market.

Photo by World Economic Forum on Flickr