Bengaluru: Mint presents a wrap of what’s happening in the e-commerce and start-up world. Which state caused trouble for which company, who shut down, and who is pivoting in search of the right business model?

Regulators take on cab aggregators

Bengalureans received unpleasant news on Sunday as the state transport department announced the Karnataka On-demand Transportation Technology Aggregator Rules 2016, which requires businesses to hold “effective licence issued to him under these rules". This meant that taxi aggregators who were yet to obtain relevant licences should immediately stop operations, significantly affecting the operations of Ola and Uber, at least temporarily.

The rules include those such as “Every taxi should be fitted with single integrated GPS/GPRS-capable vehicle tracking unit with printer, display panel and digital fare meter of certain specifications, capable of generating printed receipts for passengers" and “A driver shall be a resident of Karnataka for a minimum period of two years".

We’ve identified eight other such rules that the taxi-hailing companies may find difficult to comply with.

This enforcement has come under criticism from many quarters as being regressive, at a time when the Central and various state governments are full of rhetoric about promoting ease of doing business and the start-up ecosystem.

The companies have a temporary reprieve though. The Karnataka government on Wednesday said it will stop coercive action, including impounding cabs affiliated to these services until 20 June for allegedly plying without relevant licences, though crackdown against surge pricing will continue.

The valuation tax

Speaking of rhetoric on the ease of doing business, a proposal by the income tax department to levy tax on start-ups that saw a dip in their valuation, also drew ire from various quarters.

Here’s who doesn’t need to worry: Those who raised money from foreign venture firms, or venture firms registered with capital markets regulator Securities and Exchange Board of India.

Here’s who do have to worry: Those who raised money from angel investors.

MobiKwik’s annual profit offer

Mobikwik, a mobile wallet company, said it would offer 6% annual profit to users who maintain a monthly balance of at least ₹ 5,000 in their mobile wallets. Although this is like an interest payment, the company isn’t calling it that.

“The e-wallet company has cleverly worded it as 6% annual profit which sounds like a 6% interest on balance in the savings bank account. However, this term can be misleading for consumers and looks like a grey area. They should be more cautious," said Vivek Belgavi, partner, financial services–fintech and technology consulting leader, PwC India, in this piece which talks about the potential trouble MobiKwik might land in with the RBI. Read more

Millions on the Net, but how many pay for services?

It’s that time of the year again. Mary Meeker of Kleiner Perkins Caufield Byers, a Silicon Valley venture capital firm, said in her annual 2016 Internet Trends report that the number of internet users in India grew by 40% in 2015 to 277 million.

But worryingly for India’s internet start-ups, this doesn’t translate to a proportional number of people transacting online and consuming services, prompting scrutiny of whether they can meet the projections of investors who have pumped billions of dollars into them. Read more

What Paytm is up to

While Alibaba is set to launch its operations in India, investee Paytm, run by One97 Communications Ltd, is expected to spin off its marketplace business into a separate mobile app within the next three months, said founder Vijay Shekhar Sharma.

Although Paytm’s main business is payments, it has been growing its e-commerce offering and claims to get about 40% of its GMV (gross merchandise value or in this case, value of total transactions) of ₹ 20,000 crore from the marketplace.

Also, at a time when three out of the 11 recipients of the payments bank licence have withdrawn their applications, Paytm founder Sharma said on Monday that he plans to start the bank with an initial capital of ₹ 300 crore and will launch the business before November.

The entity, Paytm Payment Bank Ltd, is expected to become the second biggest revenue source for the parent firm after the core payments business in about two years.

Optimistic consumer internet companies’ forward looking statements

On Monday, real estate portal Housing.com, run by Locon Solutions Pvt. Ltd, said it is looking to reach $10 million in revenue in the current financial year with a monthly growth rate of 200%. The company, which has been in the news for its troubles with its founders more than anything else, began monetising early this year with the help of advertising where property listers pay to boost their listings. Read more

Online fashion retailer Myntra said it expects to increase gross sales by 90% to ₹ 5,000 crore, net of discounts, this financial year by improving its product selection, adding new categories and re-opening its desktop website, even as it cuts spending on discounts, logistics and other operational costs.

AppSurfer shuts down

Pune-based AppSurfer, which made software that helped smartphone users try out apps before downloading them on 1 June, said in a blog post that they were shutting down. The company, which started in 2012, is shutting down as Google Inc. recently announced a similar feature called ‘Instant Apps’ that enables users to stream apps, instead of downloading them.

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