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Digital India How the internet is changing the subcontinent

Chandni Chowk, the heart of Old Delhi, the historical part of the Indian capital. The main street is already clogged with cycle rickshaws and delivery vehicles. Anyone who leaves them ends up in one of the countless small side streets. It goes deeper and deeper into the middle of this sea of ​​buildings, all of which seem to somehow overlap and protrude over the sidewalks. Skeins of poorly stretched power cables connect the houses. At some point, alleys, entrances, stairways or backyards can hardly be distinguished. In some places the garbage piles up. A never-ending stream of people pushes through the narrowness. A muezzin calls for evening prayer.

Old Delhi's alleys have been one huge bazaar for centuries. Street vendors offer trousers, shirts, a shave, a blessing - or samsosas, baked dumplings. Spices and smartphones are on display in the shops. Here, in the middle of this bizarre world, a little off the Gali Bhojpura alley, twice right, twice left around the corner, a glass door opens to a small textile empire. It's called Brijraj Fashion. Employees pack saris, traditional Indian women's robes. Errand boys pick up the goods. 300,000 saris are spread over four floors, most of them hand-sewn, gold-embroidered, in shimmering colors. This is the realm of Anand.

Brijraj Fashion in Old Delhi ( / Jürgen Webermann)

"Hello, welcome. I'm Anand. My family is the third generation to run the business here. We have been here in Old Delhi since the 1950s, we were the first sari wholesalers in this area."

For more than 50 years, business was good, but somehow also sluggish. Only the fall wedding season was stressful for Anand's family. Otherwise hardly anything changed in Old Delhi. The customer base remained clear. The delivery areas as well. They were all in states around the capital.

"In 2003 people came to us who wanted to sell fashion on the Internet. I thought it was a good idea, although at the time there was neither a decent infrastructure for it nor people who were trained in Internet trading. In addition, we are a big family . And it was pretty difficult to convince the old people of this market idea. To be more precise: The work of persuading them took six years. "

A new world has opened up for the backyard dealers

After competitors from Brijraj Fashion had dared to use the Internet and were successful with it, the family elders finally gave Anand the green light. That was in 2009.

"After we started selling online, our sales quadrupled. In the meantime, everything has slowed down a bit because the competition has grown too. We have to get by with less good numbers. Our growth was recently only 30 to 40 percent. "

When Anand went online, investors and company founders in India had just started building a huge digital bazaar that would change the country forever. From now on, the heart of traders will no longer only beat around the Chandni Chowk in Old Delhi or in the city's chic shopping centers, but rather on online platforms. Everything is on offer there: from diapers and sacred cow dung for religious ceremonies to cars. One of these platforms, the Flipkart company from Bangalore in South India, sold goods worth 500,000 euros shortly after it was launched seven years ago. In 2015, Flipkart already had sales of nine billion euros, and Anand saris were among the products sold. This opened up a new world for the backyard dealer. His customers no longer only come from the area around Delhi, but from the entire subcontinent. Brijraj Fashion employed 25 people in 2009. Now it's 80.

New company structures have emerged

The city of Noida is located at the gates of New Delhi, in the state of Uttar Pradesh. Noida was once laid out as a kind of industrial and economic zone. But the Indian capital has long since swallowed up this accumulation of residential and business districts. Now Noida is also a location for those who no longer earn their money in real bazaars like Old Delhi, but in the Internet bazaar.

The company pay tm resides in Noida in a modern office building with glass facades. The conference rooms are called Rome or London. In one of these rooms, web designers discuss new designs for the website. A board meeting is taking place in another room, separated only by glass. The actual control center of pay tm is on the second floor. It's nothing more than an open-plan office with perhaps 70 desks. Young employees, almost all between 25 and 35 years old, sit here at laptops, including the company bosses. Flat hierarchies are important to them. That alone is revolutionary for a country like India. Otherwise there is an extremely rough tone between bosses and subordinates. At pay tm things are different. One of the employees has turned on the music system, it doesn't bother anyone.

Pay tm means "Pay Through Mobile" - that means paying with the mobile phone. ( / Jürgen Webermann)

Pay tm means "Pay Through Mobile" - that means paying with the mobile phone. The name of the company reveals why it was able to become so successful so quickly. Digital India no longer means laptops or computers. More than 300 million people now use their smartphones to go online. And when it comes to numbers, Sudhanshu Gupta goes one better.

"Our goal is to have 500 million customers loyal to us by 2020."

Sudhanshu Gupta is one of the leading figures in the digital upheaval in India. Pay tm poached him from competitor Flipkart in order to set up a trading platform for pay tm. The company started in 2010 as an online payment system for mobile phones. Billionaire companies are behind pay tm. The Chinese online retailer Alibaba has invested 620 million euros in pay tm. The Indian industrial giant Tata has also secured shares - like many, so far has only been speculated about.

"We do nothing else than bring dealers and buyers together on the Internet. On a platform with a large number of users. And we lend this user base to dealers, and with it the trust that our customers have in our name. As me When I was with Flipkart in 2013, there was still no talk of smartphone applications. We were right at the top. But I found pay tm exciting from the start, and I asked myself whether that would be the future: smartphones. So I got one Give me a push and I'm to pay tm. Because what you do in the internet business today can be surpassed by a new idea tomorrow. "

Fight with lots of bandages

Sudhanshu Gupta's career is an example of how rapidly the digital economy is growing in India. But also for which bandages the big online companies are fighting with. The Indian companies and their biggest foreign competitor Amazon woo each other's brightest minds and engage in fierce discount battles with discounts of up to 90 percent. Amazon is said to be employing data scientists to develop a pricing policy that simply harms competitors. Flipkart posted a loss of 270 million euros in 2015 due to the price war. At pay tm there was a loss of 50 million euros. But all that is factored in, says Sudhanshu. After all, the first thing to do is to conquer the market.

"We have strong investors and that helps us a lot. Alibaba is the largest online retailer in the world. They have gone through all of the challenges that lie ahead."

Because despite all the gold rush mood: the biggest challenge for Gupta and his team is not so much digital, but the normal reality outside of the internet. The cell phone networks often break down. There are also regular power outages in cities like New Delhi. The internet itself is often slow, despite high fees. In order to bring goods from Old Delhi to South India, the online platforms also have to set up large supply chains. It's not easy in cities like New Delhi, which are drowning hopelessly in traffic chaos. And by no means every retailer who would like to sell through companies like pay tm is trustworthy or talented.

"You have to go out into the real world. We carefully check the dealers, their documents. We call them, send agents to the stores. We check to see if they are authorized to sell certain brands. It's all about trust . Pay tm stands for trust. Our retailers are also located in small towns that are still brand new on the Internet. Selling in them is alien to them. They know how to convince people in stores. But they often don't know exactly, how they can sell successfully through us. You don't learn that at school here. So we offer training programs.

Our concept works well: We started a year and a half ago. And now 170,000 dealers sell through us. My goal for this year is to increase the number of dealers to 500,000. We decided on this goal in the Board of Directors. My personal goal is to make the 500,000 earlier than planned. "

Create jobs for millions of people

Companies like pay tm stand for a digital revolution. And this revolution has long since reached political India. The government faces enormous challenges. Every second Indian is under 25 years of age. The country has to create jobs for twelve to 15 million young people every year, otherwise social peace could soon be at stake. However, this does not work in conventional branches of industry. Most of the reforms aimed at attracting foreign companies have stalled. The industrial groups that are already producing in India are relying more and more on robots - so only a few jobs are created. It is currently mainly young Internet companies like pay tm that are creating new jobs.

India's Prime Minister Narendra Modi has recognized all of this. In his "Speech to the Nation" in August of last year, he called for the founding of start-ups, ie Internet companies. "Start-Up India, Stand-Up India" - this is the campaign that officially started in January. Modi wants to make it easier to set up companies, lower the tax burden and attract investors, he wants to build a broadband network all over India, he wants to have cables laid or satellites to take over the supply of the Internet. It is true that 300 million Indians now belong to the middle class - they have long been part of the new, digital economic world. But around one billion people in India have never or only rarely heard of it: They are the "unconnected billion" - the one billion who have not yet been connected.

In the middle of the semi-desert of Rajasthan, surrounded by fields, off the main road and accessible on dusty roads, lies the village of Chandauli. Maybe a thousand people live here. At first glance, Chandauli is an idyll, especially when compared to the hustle and bustle and noise in megacities like New Delhi.

Facebook founder Zuckerberg was visiting

Chandauli is actually a typical Indian village, colorful, simple houses, cows trudge along the paths, women veil themselves when strangers appear, farmers plow fields, children play catch. Nevertheless, Chandauli briefly became known throughout India at the end of 2014. The reason for this can be found in a guest book that is on display in an inconspicuous little house next to the mosque. Usually, visitors enter their name, address and mobile phone number here. The man who came in 2014 only left his name in legible writing. It was Mark Zuckerberg, the founder of facebook. Imrat Khan shows the guest book, he still clearly remembers the visitor from America:

"Some of us knew what Facebook was. But we didn't know Mark Zuckerberg. He explained Facebook to us in great detail, so we believed him. Zuckerberg asked the children if they were on Facebook, if they liked it and so on . "

Mark Zuckerberg, the founder of Facebook, was in Chandauli, India, in 2014. ( / Jürgen Webermann)

The visit was purely private, journalists only found out about it later. Zuckerberg wanted to find out how young people in the villages get online. Chandauli had got an internet center a few months earlier. The center was set up by a non-profit organization. The government has announced that it will connect all Indians to the Internet as soon as possible. But often such efforts fail before they reach villages like Chandauli. So private organizations have to step in. In Chandauli they installed an antenna on the internet center. The local authorities bought a couple of laptops. Imrat Khan, 23 years old, runs the center.

"It is mainly young people who come here. But also older people from the village. Some are looking for work, some are reading their e-mails, others are studying for school. We show them how it works and how to use a computer. For the farmers if that matters, they can find out more about the weather or what to look for next. "

So much for the beautiful theory. The practice looks different, also this morning. No connection to the internet. The cell phone network is also too weak to be able to do anything online with it. Imrat just shrugs.

"Yes, the internet is there and then gone, and today it's gone. The router is currently broken. I'm waiting for it to be repaired. It only works if we have electricity. That's about it six hours a day. "

The village of Chandauli in India ( / Jürgen Webermann)

The laptops are dusty. The internet center is orphaned, only a young person is sitting in a corner reading a brochure from the UNICEF children's aid organization about sex education. It is Mohammad, a 17 year old student.

"Up until a year ago I didn't even know what you could do on the Internet. Imrat showed me everything. I can now solve any problem, even for school. For example, for biology classes. The fact that we sometimes have the Internet here is but good for the village! "

Mohammad has never heard of companies like pay tm, amazon or Flipkart. He's happy that he knows what Google is and what to do with it.

The elderly in the village look at the goings-on in the internet center with benevolence. Also Ilyas Khan, mid-50s, small farmer with large tooth gaps. He is crouching in front of a small shop in the center of the village.

"My children sometimes use the Internet. I don't know how it works myself. I think the children learn something there. But I have no idea what it is supposed to do. They press any buttons. Maybe it will bring something good."

Simplified internet pages to solve the problem

The men standing around laugh with Ilyas Khan. For them, the Internet is a gimmick, far removed from the reality of their lives. But villages like Chandauli are dying out. Many young people migrate because it is said that there are jobs and unlimited opportunities in the cities. This is a big problem for India. Marc Zuckerberg wants to help through an initiative called "Free Basics". The idea: Simplified Internet pages that can also be opened with the weak 2G cell phone network. Then the people in Chandauli would not have to constantly wait for electricity or a repaired router.

The founder of Facebook wants to offer a hundred Internet pages in India via the cell phone network, together with an Indian cell phone company. At the top, of course, is Facebook itself. The Indian government thinks the idea is good. But the regulator sees it differently. She doubts the plan is really as social as Zuckerberg claims and has stopped "Free Basics". Because, according to the allegation, only Facebook controls which pages people should have access to and which not. The competitor Google, for example, would not be among them.

Austrian cuisine in India

While in villages like Chandauli the new online world only pops by sometimes, there is a whole new spirit of entrepreneurship in the big cities of India. Now it is even possible to order Wiener schnitzel, Carinthian noodles, potato salad and pancakes for dessert without any problems. Maya, a passionate cook, only needs a smartphone. It offers its dishes via the "Foodcloud" application. Maya rented a small apartment in a dilapidated house in the Vasant Kunj district and hired a kitchen helper. She calls her company "Erna's Kitchen" after her grandmother. Maya's father comes from India, she is Austrian and has lived in the country for 16 years.

Maya runs "Erna's Kitchen" ( / Jürgen Webermann)

"Today we have two orders, a chicken lunch menu and a Wiener Schnitzel. We do it mainly with chicken, that's what people want to eat here."

"So in the beginning I looked to see what ingredients were available and what can I do with them? When customers say they want a roast pork, then I see that I can get the ingredients. I didn't want to import anything because a lot of vegetables are grown in all parts of India, and that's why there are chives, parsley, broccoli and zucchini all year round. "

In the beginning Maya convinced many Indians with her Austrian herb butter, now families or companies can order whole menus from her. In the past, she would have had to spend a lot of money on a shop and an advertising campaign for this. "Foodcloud", the small Internet application, is now responsible for the advertising.

"So Foodcloud gave me the opportunity to get in contact with customers I would not otherwise have come into contact with. Our Indian customers in particular, because I don't really understand how to do marketing. I am very happy to have someone else that does. Foodcloud is helpful here. It opened up a new market for me. "

A highly competitive market

To deliver the food, Maya uses other smartphone applications that specialize in courier services. But it is precisely here that the many small problems that even large corporations have to struggle with become apparent:

"Well, it is always stressful to order a delivery because you don't always know whether you will get a delivery boy or not. And of course the delivery boys also work with the Internet and apps, and the problem is that the Internet doesn't always works. And when we place an order, they have to say "we will accept" or "we will not accept", and that often does not happen, then there is a time difference and then it often takes until they come. "

And that can be dangerous. Because if the supply chain gets stuck, lunch or dinner is late, companies immediately lose disappointed customers. 400 companies, like Foodcloud, specialize in the delivery of food. The market is competitive. Some companies, including the German company Foodpanda, have already had to lay off employees. According to media reports, Foodpanda is struggling with the unreliable Internet infrastructure in India, but also with fraudsters - cooks who aren't; Restaurants that don't deliver what they promise; Suppliers who are not on time. This is especially a problem for startups that started with low investor sums. Large companies like pay tm, into which investors have pumped hundreds of millions of euros, can withstand the fierce competitive pressure longer - but small companies cannot.

In Old Delhi, in his backyard empire, the sari dealer Anand closely follows the price and survival struggles of the individual startups. But because he sells on all major platforms, the discount battles are only right for him - if one of these platforms goes bankrupt, it doesn't hit him:

"For me the platforms mean good marketing. The money they burn for their discounts is money that I don't have to burn for my advertising. If I give the platforms a sari for a thousand rupees and they resell it for 900 rupees , burn the money yourself. But I get more jobs - and live happily with them. "

"The only worry is that we always have to keep up with the times. We have to know exactly what people want. The market is changing so rapidly. Those who can adapt, who can build trust with customers, will to survive."

Anand smiles broadly when he says that. The brave new online world has given him golden times. And if you believe analysts at the investment bank Morgan Stanley, then this will continue. Platforms such as pay tm, Amazon or Flipkart alone can expect sales of 130 billion euros in four years, four times as much as now. In order to really change India in a sustainable way, the digital revolution would also have to reach villages like Chandauli. Above all, this is where the decision is made as to whether the one billion Indians who have never seen the glittering digital world will be able to take part in it themselves - or whether they will just be left behind.