We bid goodbye to 2016 in a lot of turmoil.
Given the deep interconnections between India’s advanced technology sector and the United States, any steps that Trump might take will have huge consequences for India. The impact on various fronts will gradually unfold itself.
As e-commerce and cashless transactions gain ground, it is a cause of concern that most of the digital giants are either from USA or China. It looks like Amazon and Alibaba will do whatever it takes to rapidly increase their presence in India. While the tussle for dominance continues in the online consumer retail space, the scenario is more fierce for the B2B pie, which is much larger and does not require so much discounting. Whether this is acceptable to policy makers will need to be resolved, as it may result in these giants controlling relationship with customers in India.
The year 2016 saw an alarming increase from 18 to 32 percent in the market share of Chinese smartphone brands as Xiaomi, Oppo, Vivo, and Lenovo. And following the demonetization announcement, Indian mobile phone makers are planning to cut their production by 50 percent. As inventory piles up, IDC too has revised mobile phone growth estimates in India, from an 18.6 percent increase in feature phones and 32.3 percent increase in smartphones in Q3 2016 over the last quarter, to a 24.6 percent decline in feature phones and 17.5 percent sequential dip in smartphones in Q4 2016.
This is in the backdrop of leading carriers facing some disruption, while the smaller ones may be cornered to go in for consolidation, due to an extraordinary, unprecedented promotion from Reliance Jio Infocom, which at its end, is also taking a hit and extending its free services for another three months, and now offering them till March 2017.
Whatever the actual outcome, the leading financial analysts are unanimous in their opinion that while demonetization will make only a minor dent in corruption, it will end up lowering India’s GDP growth forecast for the fiscal from 7.4 to 6.9 percent. And the longer the disruption period, the higher the negative impact on GDP.