Facebook finally forays into the Indian economy by investing nearly a 10 percent in Jio Platform of Reliance Industries’ digital business unit. This stake comes in at $5.7-billion, this makes FB one of the largest foreign investors all across India.
How does this benefit Reliance?
The Chairman of Reliance Industries, Mukesh Ambani addressed the investors that the group expects to reach a zero net-debt company status soon. And this Facebook deal will greatly assist in achieving that goal, as Rs 43,574 crore is trimmed from its outstanding debt of around Rs 2.92 lakh crore. Saudi Aramco is expected to invest around $15 billion (around Rs 1.05 lakh crore) which grants them a 20% stake in the refining and petrochemicals business under Reliance Industries’. Also, they are planning on selling 49% of its fuel retail joint-venture to British firm BP for Rs 7,000 crore. According to the experts, the Aramco deal could be under threat due to the oil price crash caused by the pandemic.
Yet another reason is the fact that online essential goods selling has gone up significantly. Online players represented only 1% of the Rs 80,000-crore grocery market in India, before lockdown but after that, they accounted for about 50% of the grocery demand in the country. Bigbasket is one of the biggest gainers. Here is where WhatsApp’s over 400 million users in India comes to play, a partnership with Reliance Retail and Jio can enable consumers to find nearest grocery stores and deliver products and services to their homes through JioMart using WhatsApp.
How does this benefit Facebook?
Facebook has made various attempts to infiltrate the Indian economy but to no avail, take for example their attempt with Free Basics, Express Wi-Fi, etc., they brought these initiatives believing that free data is what could connect the next billion online users. That’s about the time when Jio came into the picture and raked in over 388 million new subscribers online. This new partnership with Reliance could help Facebook deal with the regulatory skirmishes they had in India, including some of its major initiatives such as WhatsApp Pay.
The online world is expected to embark on a huge growth trajectory as the virus is still out on the loose and there is no solid estimate as to when a vaccine can be found.
