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'The numbers are beginning to favour India'

By Sumit Bhattacharya
Last updated on: January 16, 2006 16:03 IST
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If you need an example of how the Internet is changing the media business, Rafat Ali fits the bill to the T.

And if you need an example of a person of Indian origin making it big following his dream despite hurdles in his way, he fits the bill even better.

Owner and creator of the award-winning digital media business news and analysis site, Rafat is also the editor of Moco.News, a news site devoted to mobile content.

He has billionaires seeking an appointment to discuss investments with him. An American web site, MediaPost Publications, has this to say about him: 'The fact of the matter is that in the broadband Internet world, Ali can stand alongside a Time Warner or a News Corp. And feel his power.'

Not so long ago, in October 2001, he was without a job.

Born in Salford, United Kingdom, Rafat is "technically a British citizen".

His professor father, mother, brother and two sisters live in Aligarh, Uttar Pradesh.

He did his kindergarten schooling in Denver, Colorado, when his father was there on a teaching fellowship. The family returned to Aligarh in 1980, where Rafat did the rest of his schooling.

He graduated as a computer engineer from Aligarh Muslim University. But he wanted to be an advertising copywriter.

So he went to Delhi and joined a public relations agency in 1996. "Two years later, I realised I liked the other side of the PR business better: journalism."

He joined the now-defunct advertising magazine A&M. "In 1998, I started writing about online advertising and media for A&M… very early days in India," he points out.

He wanted to write about the Internet business, and saw no options in India, so he got an admission to Indiana University, Bloomington, where he was the Knight Foundation Fellow.

He moved to New York City in January 2001, living with friends in New Jersey for the first few months, and looking for a job. An internship with saw him moving to Manhattan. He joined the web site full time, till the company shut down in October 2001.

A week after -- "these were the dog days after 9/11," he says -- he was "very lucky to get a job" at Silicon Alley Reporter. Within about a year, he became the managing editor.

Then the magazine and site closed down. He moved to London in late 2002 and lived there until March 2004.

He now lives in Santa Monica, California, and is yet to own a car of his own, though his wife, an Indian-origin South African-American pastry chef, does. He visits India every winter.

So when he noted in an online article that telecommunications and Internet in India were two goldmines waiting to be tapped by investors, we decided to shoot him a few questions.

In e-mail responses to Features Editor Sumit Bhattacharya, Ali says the digital dream is the only visible way out of the morass of poverty.

The first of a two-part, fascinating interview:

Dear Rafat, since when have you been noticing the changes in India that you mention?

Well, really since 2002. This was when it was recession everywhere else in the world, but India was booming because outsourcing had started happening in earnest. Delhi was improving -- roads, pollution under control, etc.

You say the world perceives India as the technology back office and the next great consumer market of the world. But then, the world also perceives India as the land of spirituality and backwardness. Which of these, in your opinion, is overriding the other now. And why?

For now, at least in the United States, it is a mix of both. The fact that it is a mix is a good start for India. There is no denying that huge, almost insurmountable problems remain in India, so the perceptions are rooted in reality to a large extent. But

the other side which is changing, the big consumer market and opportunities in India, that's a reality which will take some time to get rooted in US and other Western minds.

It is all about economics. The numbers are beginning to favour India and those investing and working in India. That will help change perceptions faster than any government effort or otherwise.

On a slight tangent, the technology back office image is very real: If workers in the US are losing their jobs and those jobs are going to India, the word spreads like wildfire. Again, economic realities in play help change perceptions faster than cultural changes.

You say technology is a great leveller in India. But many would argue it is the great divide. As in, while a miniscule minority flaunts the latest gizmos on the tech horizon, the vast majority is deprived of basic human needs. What changes have you seen that can support your argument?

Technology need not only be about gizmos. It is about communication, information and equal access. It is not so much the use of technology in personal life, but the use of technology in the infrastructural, economic and working fabric in India that matters.

Look at the ICT -- information and communications technologies -- kiosks coming up. Or take the fact that companies like ICICI Bank, NCDEX (National Commodity & Derivatives Exchange, India) and the rest are using technology to send market signals across to people. These tickers now tell farmers what to grow, and how much to sell at. Farmer, who till now, were dependent on local middlemen.

These are changes that will happen over a period of time. These technological changes bring about incremental social and cultural changes and that will lift the country out of poverty.

The whole point is: this seems like an opening, an inflection point for India. At least this gives hope of change... Tell me one other way to get out of this morass of poverty?

In your opinion, investment in communications technology in India could be the next best thing. What can an investor expect in terms of returns? What are the key areas?

The returns for the telecom companies have been huge in India -- it is purely a matter of scale. If you think you're going for a niche, forget it. Niches in India don't yet make money. It has to be a mass-market game. The key areas are very basic: agriculture, weather (subset of agriculture), medical/health, education, roads, real estate/construction and other basic necessities like water. That's where technology and access to information (through communications) will help a lot. That's what investors need to look at.

But there is a reality check here too: These are not short-term investments. At least five years at the minimum for the returns to start coming. But the absolute dollar values of these investments are small, compared to, say, other Western countries.

So, hopefully some of these investors will take a hedged-risk.

You have earmarked investment in online technology as another golden opportunity waiting to be tapped. What are your reasons for such an observation?

Internet-based service typically means low cost, and low maintenance for sure. That's a huge leg-up if you want to operate in India. Things or services have to be low maintenance for them to work. This is both because of the weather, logistics and infrastructural reasons.

Can the Internet make a real difference without technology in local Indian languages?

No, and that's the biggest hurdle or the area of most opportunity, depending on how you look at it. Again, it is not a niche market in India. That's where a lot of companies and investors trip up.

Twenty-five million people speaking the same language  -- and that's a small regional language -- is not a niche. It is a mass market.

The companies don't have to wait for the government to do anything about it, because it won't. That's where small software companies and start-ups can come in and help develop the market.

Don't miss the second part of the fascinating interview with Rafat Ali, where he talks about Chinese competition and lots more!

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