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Internet Shutdowns Amidst NRC-CAA Protests Are Crippling E-Commerce, Fintech & SaaS Sectors In India

Internet Shutdowns Amidst NRC-CAA Protests Are Crippling E-Commerce, Fintech & SaaS Sectors In India

India Internet Shutdown

With the longest government-enforced cyber darkness in the largest democracy in the world, companies relying on tech to run their business were the biggest losers. At a time when the Indian emerging tech sector is thriving, the growing number of Internet shutdowns will just exemplify the difficulties in pushing the digital ambition of the country.

In a bid to thwart the misuse of social media platforms to disturb the peace during the protest against the Citizen Amendment Act (CAA), the Indian government is continuing to normalise Internet shutdown and suspending mobile communications for thousands of citizens. This, in turn, leaves the companies, who run their businesses specifically online, to suffer a heavy loss.

Impact On E-Commerce

This long-term Internet shutdown is also causing other collateral damages. From 2012 to 2018, the Indian economy has lost around ₹ 21,336 crore due to several cases of Internet shutdown. A telecom operator claimed to incurs a minimum loss of ₹ 1.5 crores ($15 million) every day. 

Rajan Matthews, director general at telecom industry body Cellular Operators Association of India — COAI, which represents the Indian telecom industry including big players like Bharti Airtel, Vodafone and Reliance Jio — termed this instance to be a ‘conservative estimate’ and confirmed that each telecom company is currently making a loss of at least INR 1.5 Cr daily per state. 



He said, “Internet shutdown is a blunt instrument and should not be used frequently. In today’s connected world, when you shut down the internet, people cannot do banking, no transactions take place, people face issues in transportation. It affects daily life to a very large extent and therefore it should be used as a last resort. We have, from time to time, conveyed to the government that its use should be more surgical.”

With such a restriction to Internet access, Indian citizens are unable to contact other people over the internet, access emails on their phones, pay for bills online, use services like Paytm, PhonePe and UPI, or use credit/debit cards for payments. Even, the cab owners working these online platforms like OLA or Uber are also losing more than ₹ 2,500 every day as people cannot book cabs on the said apps.

Similarly, even the e-commerce segment started incurring losses due to the Internet ban. Online delivery apps — Zomato, Swiggy, Uber & Ola eats handling 2-2.5 million orders daily, and e-grocery platforms such as Grofers, which rely their businesses on the Internet, have seen a volume dip by 10-20% in their business. Online cab providers have also received a big hit from shutdown-hit areas. 

Vishal Jindal, the co-founder of Biryani By Kilo, an online food startup, believes that this Internet shutdown is, of course, a disruption to their business, but the company is aiming high and trying to find a workaround by routing customer queries to its call centre. He further mentioned that this cyber lockdown has impact 10-20% of their business which is almost two-thirds of its orders online. 

Even, Grofers has to reschedule approximately 25,000 orders from areas like Lucknow and Guwahati. CEO, Albinder Dhindsa told media that the company is trying to figure out a manual way to deliver orders, as Grover’s system doesn’t work without the Internet.


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Such as in the case of another startup, MilkBasket, which relies heavily on online technologies, like cloud, to deliver milk to its customers. Anant Goel, the CEO of the company said, “Customers could place orders but our field force could not access the Internet during day and night, therefore this impacted our order volumes. But without last-minute hacks, we could bring down the revenue loss to 5%”.

Also Read: Apps People Used During Internet Shutdown

Impact On Fin-Tech

Another industry which has witnessed a halt due to these shutdowns is the fin-tech industry. Rishi Gupta, CEO of Fino Payments Bank said to the media, “We have seen our business in certain parts of UP being hit due to internet closure because our businesses are online-based. Several merchants haven’t been able to carry out transactions. There also has also been a problem in moving cash to sensitive areas, and we hear that a few bank branches have been shut down.”

The major areas which have impacted are the basic online banking, ATMs’ cash disbursal, OTP-related services, KYC verification, and UPI and AEPS transfer have been impacted. To which, CEO of an ATM services company believes that, while the company understands the necessity for a shutdown, the cost of inconvenience is always high. He said, “While in most areas the disruptions were temporary, availability of cash was an issue for many people, even though most ATMs run on VSAT (very small aperture terminal) connections.”

Other voices included Anand Srivastava, founder of financial services provider Beam, who mentioned how AEPS (Aadhaar-Enabled Payment System) got severely affected. He said, “AEPS is used by both rural and urban areas in local grocery shops and medical stores and stoppage of Internet has severely affected their business in Uttar Pradesh.”

With this current year being particularly one of the worsts in terms of Internet shutdowns, experts from Deloitte said that the government should be cautious on when, or how often, it resorts to such an exercise. According to one of their reports, it is estimated that economies with low and medium Internet connectivity could lose about $0.6 million and $6.6 million per day per 10 million population, and for a “highly connected” economy, this could go up to as much as $23.6 million.

Impact on Software Companies

Experts believe that the tech industry of the country has also been paralysed by the outages. Morgan Stanley analysts led by Keith Weiss wrote in a note that, previously during such Internet outages, tech companies like ForeScout, Pivotal, Red Hat have seen a downfall in their revenue because of their high government exposure. Many big companies usually don’t disclose their scale of revenue but it has been analysed that Oracle and Microsoft have also seen a reduction of 15% and 9% respectively in their revenue during this year-end.

In India, Abhijeet Mukherjee, 35, CEO of a Ghaziabad-based tech media company called Guiding Tech, which experienced more than 24 hours without internet last week, said how his company has millions of online followers and how the business got affected as his entire work is on the Internet.

Manipur being one of the most controversial areas when it comes to anti-CAA protests leading to Internet shutdown, the state has seen a downfall in its IT industry. Rohsnikumar Yambem, CEO of Globizs Web Solutions Company, claimed that the broadband-network connections received through optical fibre cables were also suspended on the third day of the Internet ban, leaving a dent in the company’s annual turnover. He said to the media that his company lost around Rs. 6 lakhs during the net shut down as more than half his 22-member production team were rendered unproductive.

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Yambem said “As a pure IT company, we manage around 600 websites in Manipur and provide live web support to at least 200 clients. During the internet shut down any kind of updates for our clients, including government tender notifications, was impossible. Our main server is maintained in the cloud, and Quick Books, where we keep our accounts were inaccessible for ten days.” Sangai Technology, along with Cobigent and two other IT companies share office space at the Manipur IT Park in Mantripukhi, saw its annual turnover decline by 35 % due to the shutdown. 

The Game Of Numbers

According to a report, India has gone through a total of 375 times of Internet shutdown, since 2012, and most of them have occurred during the last two years — 134 in 2018 and 103 in 2019, including Kashmir, Delhi, Assam, Tripura, Meghalaya, Arunachal Pradesh, and part of West Bengal, Karnataka and Uttar Pradesh, to name a few, according to Software Freedom Law Centre. 

The report also states that the Indian economy is estimated to have suffered a loss of over $3 billion due to these Internet shutdowns from 2012-2018. This brings India close it competitors — China, Myanmar, North Korea, Iraq, Syria, Pakistan, and the Democratic Republic of Congo, in Internet blackout longevity, and neither of which could boast of being secular, democratic or even concerned about its public demands. Ever since Jammu and Kasmir lost its autonomy earlier this year — August, the government has been on a spree of cracking down Internet services to monitor law and order during any sort of discrepancies. This has been a tried and tested solution to control any sort of population is by cutting down their communication options. As of last year, 2018, India has been leading the world in Internet shutdowns accounting for almost 67% of the total recorded all over the world, according to a report

Reacting to the internet shutdown in Delhi, Mishi Choudhary, a technology lawyer said in a statement, “It’s really concerning that the capital city of the largest democracy in the world has shut the internet down and cut off its citizens from communicating. This is unprecedented and could have an irreversible and detrimental impact on India’s aspiration to become a digital leader.”

However, Internet shutdown isn’t a new concept during explosive political events. Some of the famous cases are — 2005, Nepal internet shutdown, where the country has stopped its telecommunication network during a government discrepancy; and 2011 when Egypt had witnessed several internet shutdowns during the Arab Spring protests.

Also Read: Govt. Employed Drones to Monitor Situation Amidst CAA Protests

Outlook

Shutting down the Internet is now becoming a regular feature of law enforcement and the Indian government, or rather has become a trend. It has also been distinguished as one of those countries who are imposing the most blackouts in the world. With no sign of this blackout ends, the citizens have now started to normalise their life despite having such a huge crisis. 

It is to be believed that the Indian government should evolve and push its law and order beyond the use of Internet shutdown. Some of the other approaches that have been previously taken to monitor the population are — in 2006, during the Cauvery water protest in Bangalore, the police didn’t go for shutting down the internet, it rather took Twitter to eliminate misinformation and stop spreading rumours proactively. Even during the Ayodha dispute, many departments of state police has proactively using social media to monitor people and their objectionable comments and posts. The government could also involve the National Cyber Security Policy into the scenario to get a better articulation.

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