Explained: Amid China chill, US tech giants warm up to Jio

Written by Pranav Mukul | New Delhi | Updated: July 16, 2020

With the exception of Microsoft, all other firms have a stake in Jio Platforms. In effect, 27.61% of Jio is now owned by US firms.

Google’s investment of Rs 33,737 crore, or $4.5 billion, in Jio Platforms takes the total money pumped into India’s largest telecom company by US-based investors to more than $16.7 billion — almost half of what India received from the US as foreign direct investment (FDI) over the last two decades.

Jio’s fundraising spree this year has also left behind the cumulative investments made in India’s technology sector in the whole of 2019, which stood at $9.36 billion.

Between April 2000 and April 2020, cumulative FDI inflows from the US stood at $29.78 billion, according to Department of Commerce data (not including investments by US-based companies routed through other jurisdictions such as Mauritius, British Virgin Islands etc.).

With Google on board, Jio now has business arrangements with five US technology giants – Facebook for a partnership of its messaging platform WhatsApp with Jio’s e-commerce venture JioMart; Microsoft for its cloud computing platform Azure; Google for building an Android-based smartphone operating system; and Intel and Qualcomm for developing new products.

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With the exception of Microsoft, all other firms have a stake in Jio Platforms. In effect, 27.61% of Jio is now owned by US firms.

This assumes significance when the Indian government has signalled curbs on Chinese technology investments while banning 59 mobile apps with links to Chinese Internet majors such as Alibaba – one of the largest Chinese investors in Indian start-ups.

The first one to step in was Facebook that purchased a 9.99% stake in Jio back in April for Rs 43,573.62 crore, or $5.7 billion, becoming the biggest minority shareholder in the company.

This was followed by a series of US-based private equity firms like TPG Capital, L Catterton, General Atlantic, Silver Lake, and West Asian sovereign funds like Mubadala and ADIA of the UAE and PIF of Saudi Arabia picking up minority stakes in Jio Platforms.

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Reliance Industries, of which Jio Platforms is a unit, has so far divested 32.97% stake in the telecom company for Rs 1.52 lakh crore.

In addition to Jio, other large companies in India’s Internet sector have also been flooded with American money. Seattle-based Amazon has invested $5 billion in India, with a plan of investing an additional $1 billion in its India operations announced earlier this year.

On Tuesday, US-based retail behemoth Walmart announced funding of $1.2 billion in its Indian e-commerce unit Flipkart, in which Walmart purchased a majority stake in 2018 for $16 billion.

Reference

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