On 22nd April 2020, the Facebook-Jio deal was established. Facebook announced a $5.7 billion investment in Mukhesh Amban-led Jio platforms.
Along with the investment, Facebook will hold a 9.99 percent stake in Jio Platforms. Also, it targets to be the largest minority shareholder.
For Reliance Industries, the group that owns Jio, there exists unparalleled tech power that Facebook brings in India. Now, this opens the gates for Jio to compete with the most consumer-friendly fintech players in the Indian market today.
In the month of February, the RBI, Reserve Bank of India released draft guidelines for an NUE, New Umbrella Entity, that opened doors for a parallel payment infrastructure to the NCPI, National Payments Corporation of India-operated UPI.
Now, some may witness the Facebook-Jio deal as a threatening UPI and Indian public Infrastructure. But, this the entire motivation of the government behind this.
Moreover, the RBI has been speaking consistently regarding the need for innovation and competition in payments. With this ambition, it issued the NUE draft.
The UPI architecture was getting so restricted in capacity, mainly by a few concentrated players, that last year the NPCI proposed setting quotas for different payment players.
In order to qualify under a new payment framework, competition is stiff. That is because all the boss brands namely, Paytm, Google Pay and PayU take interest in qualifying for a license.
In that scenario, Reliance Jio already had a formidable appearance with its Retail infrastructure backing its ground. What the Jio wallet would have probably lacked in consumer-friendliness, Whatsapp Pay and Facebook would now make up for a mile.
The Facebook-Jio deal idea is much wider than any regular tech investment in India. With digital payments on the high rise globally with the COVID-19 crisis, the deal was perfectly timed.
The user adoption in India stands at 100 million for UPI, 400 million for Whatsapp and 388 million for Reliance Jio. With the interests of policymakers aligning with the two firms, this is an agreement where everybody wins.
Now, Facebook gains solid base against regulatory and other market forces in India, Reliance boosts up its technological layer, finds a way out of this debt and the RBI receives a worthy competitor to the NPCI to expand digital financial inclusion past the upcoming hundred million years.
This way, with the cooperation of Facebook and Jio, participants are benefiting impacting the country’s economy indirectly. Also, Mukhesh Ambani-led Jio will revert back to zero debts on March 2021.