Overview

Whether Facebook-Jio Deal is envisaging to promote block-chain technology and

cryptocurrency in India?

The world economy is hard hit by COVID-19 which led to a wave of caution amongst the global investors. The world’s leading social media platform, Facebook, went ahead and invested $ 5.7 billion (INR 43,574 Crores) in Reliance Jio Infocomm Limited (“JIO”). JIO is one of the biggest telecom service providers in India and according to the Telecom Regulatory Authority of India (“TRAI”), JIO has a user base of around 325 million people. Interestingly, this deal was completed after the Supreme Court of India passed a judgement stating that putting complete ban on the use of cryptocurrency in India shall violate Article 19(1)(g) of the Indian Constitution.

The chairman and managing director of Reliance Industries Limited, Mr Mukesh Ambani in the  42nd annual general meeting of Reliance Industries Ltd. (“Reliance”), discussed about the importance of block-chain technology and their plan of promoting the use of block-chain technology in India. With this deal it is clear that Reliance brought on table its plan of action on how it shall use block-chain technology in India, as Facebook has its own cryptocurrency project under the name “Libra”.  Libra is a cryptocurrency which uses block-chain technology and is also backed by the Reserve of high quality liquid assets.

Through this deal, Mr Mukesh Ambani is apparently looking forward for developing an e-commerce platform and transforming digital payments in India. This plan includes to develop an e-commerce platform categorically for small ‘kirana stores’ and to expand that platform to include farmers of India.

In a nutshell, block-chain technology shall assist big organisations in their financial services by keeping the cost low and improving the overall efficiency. Further, the transactions performed using block-chain technology are more transparent, efficient and trustworthy. Block-chain transactions are decentralized in nature which does not depend upon any central platform to clear the transactions. Due to these benefits, many organisations and start-ups are looking forward to incorporate the block-chain technology in their scheme of things.

Further, NITI AYOG in its recent report on block-chain technology mentioned different ways in which block-chain technology can help the Indian agricultural sector, by revamping the utility of e-NAM and by creating an audit trail of all farmer produce and removing the mistrust between farmers and arhatiyas (mandi intermediaries).

Even the Reserve Bank of India has been speaking repeatedly about the need for competition and innovation in payments, and issued the New Umbrella Entity draft with this aim. The UPI architecture was getting so constrained in capacity, especially by a few concentrated players, that last year the National Payments Corporation of India proposed setting quotas for different payment players.

With the above-mentioned facts and circumstances, the idea behind the JIO-Facebook seems to be to use block-chain technology and to increase the use of cryptocurrency for ecommerce transactions in India. Though Facebook has still not got any clearance from the Indian government with regards to its project Libra, it will be interesting to see how JIO will use its telecom infrastructure and data base to support the block-chain development and how Facebook will tap the social media firepower for digital transactions. However, one thing is for sure that the joint efforts of Facebook and JIO will surely help MSME sector and will increase digital payments without burdening the current UPI payment method.