Mumbai :The e-commerce bubble is likely to burst sooner than later as businesses run on profits and not on ideas, former MD of Network18 Raghav Bahl said.
“The bubble is going to burst. History has been witness to this time and again. For the past 100 years, these bubbles have been created from the Tulips, to the dotcoms and now e-commerce. Ultimately, businesses run on cash flows and profits and not on ideas that can be valued at astronomical figures,” he said at the India Retail Forum (IRF) here today.
He pointed out to the number of young people coming out of universities and IITs who want to become entrepreneurs indicating the interest in doing business in the country.
“However, they need to think beyond the services sector, and consider a broader framework,” he said.
Retail czar Kishore Biyani, however, felt that there is a fundamental problem with this phenomenon as he believes people are restricting the scale of their ideas.
“I think there’s a problem here. My daughter is 25. I have spoken to her friends who want to open a waffle store. The younger generation is thinking so small, creating a wave of businesses that are less than Rs 1 crore, when you should be thinking of earning a salary of Rs 1 crore,” he said.
On new introductions into the system like ‘Aadhar’ and mobile wallet payments, Biyani said he is “not a great believer in Aadhar.”
“I don’t see society changing that fast…it will take some time to gain momentum. After all, 30 per cent of India is not yet accessible. How can Aadhar work?,” he asked.
Underlining the regulatory constraints, Biyani said the single most difficult issue the industry is facing is ‘ease of doing business’.
“There is a need for structural reform. For instance, we have 11 to 13 cases against us for using the term ‘mfd’ instead of manufactured on our products,” he said.
Taking a cue from Hardik Patel, who protested in Gujarat, Kishore Biyani said entrepreneurs will have to get on the streets to protest against the regulatory hurdles.
Bahl concurred, and remarked, “I am amazed why Indians don’t get angry. I believe in Hardik Patel, that a young entrepreneur felt that we should get our dues, because we pay taxes.”
Terming India as a ‘young country with old thinkers’ Biyani said the system will get a few jolts as the pressure builds on the government to clear regulatory hurdles.
“I think there will be one more cycle where delays will be tolerated. The pressure will build on the system and it will not be tolerated any more. I believe that the system is ready for a few jolts, and this is what is happening at FTII, I wish some of that could happen in business also,” he said.
“A lot of business people will also go on strike and say you have got to make it easier for us. It is ridiculous the kind of constraints sometimes we have to face,” Biyani added.
While entrepreneurship is gaining momentum, serious job creation is not accelerating at a fast rate, Bahl said.
“Having a formal economy, bank account, comes with job creation. That is what will drive it,” he said.