Reliance Facebook Deal – Background
The Modi government’s ideology visibly encompasses towards privatization and pro-corporatization. The recent farmers’ bills set in motion by the NDA government are on the same lines given the Reliance-Facebook Deal. Given the importance of these reforms and the future of an agrarian country like India, it is pertinent to understand the rationale behind these acts.
The Farmers’ Bills
The Central government’s move to replace three Bills on agriculture reforms – The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020; The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 and The Essential Commodities (Amendment) Bill, 2020 became a bone of contention within the country.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 attempts to widen its scope outside the APMC (Agricultural Produce Marketing Committee Act) regulated mandis and to create space for private traders. The government argues that this is necessary for improving the price offers that farmers get for their crops.
The second law, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, seeks to promote contract farming, thereby attempting to place the Indian farmer in the global corporate food chains, again with the promise that the farmers’ incomes would rise as a result.
Apart from these two laws, the Essential Commodities (Amendment) Act, 2020 removes several crops, including cereals, from the list of essential commodities, effectively doing away with hoarding restrictions on these crops by private entities. This is in sync with the idea of the other two Acts to facilitate private players to invest and increase their presence in the farm sector.
The Specifics of the Reliance-Facebook Deal
The nation-wide lockdown in March 2020 pushed customers to go digital ensuing a surge in the online grocery market. Grabbing an opportunity to augment Reliance, Mukesh Ambani collaborated with Facebook i.e. Reliance Facebook Deal, to jump in the e-grocery market through JioMart. Reportedly, Facebook has bought 9.99 per cent stake in Mukesh Ambani’s Reliance Jio for Rs. 43,574 crores or USD 5.7 Billion, making it the largest minority shareholder in Jio Platforms Limited.
Notwithstanding the data-privacy issues, the Reliance Facebook deal seems to monopolize in the e-grocery market. Given the Reliance Facebook Deal, both Reliance and Facebook through Whatsapp could potentially use the market dominance gained in the telecom and social networking services to create dominance in the e-commerce market.
Furthermore, the new partnership is expected to expand into the agritech domain with the JioKrishi app. The JioKrishi app will offer farm-to-fork supply chain support as well as data analytics.
JioKrishi would send alerts to farmers updating them on the weather, seasonal pests, crop loss trends, or rare attacks such as those from locusts. Besides this, the company will also be leveraging its partnership with Facebook (Reliance Facebook Deal) to incorporate the JioKrishi app in WhatsApp. This would allow Reliance Industries to send personalised information or alerts to the farmers. Moreover, JioKrishi could also be integrated with JioMart, where Reliance would make the deliveries directly to consumers.
With a foot in the door at Jio, Facebook gets more of what it desires most: users and their data through the Reliance Facebook Deal. Jio had almost 371 million subscribers as of last December, according to the Telecom Regulatory Authority of India.
Clearly, the deal to acquire just under 10% is about a lot more than agriculture and food supply chains. But impact of the Reliance Facebook Deal on the sector could be massive.
The Nexus between New Farmers’ Bills and Reliance-Facebook Deal
With the introduction to the new reforms in the farm bills, the agriculture sector in India is set to be privatized with profit maximization as the main purpose. Corporate companies will look out for big farmers resulting in a loss for small farmers and traders.
The Reliance Facebook deal has the potential to dominate the e-grocery market with their existing high number of users. The new farm bills will act as a catalyst for the unlawful competition practices of major companies like Reliance, the outcome of which may turn out like the telecom sector.
The whole agenda towards privatising different sectors of the economy will surely help in ‘ease of doing business’ but the repercussions of the same must be borne in mind. Huge benefits will come with huge costs.
Is the future of ‘Aatma Nirbhar’ Bharat under the clutches of corporate giants?
