Also in this letter:
■ Ola offers to replace S1 scooter part amid safety concerns
■ I-T department sends Rs 549-crore notice to Amazon Web Services
■ Startup accelerator YC to shut late-stage fund
SVB collapse: Startups meet Rajeev Chandrasekhar to highlight issues
More than 400 representatives from the startup and venture capitalist (VC) ecosystem met the minister of state for electronics & information technology Rajeev Chandrasekhar on Tuesday to deliberate on the impact of the Silicon Valley Bank’s (SVB) collapse on Indian companies.
The minister said the government was “laser focussed” on ensuring every startup can navigate the crisis.
Quote, Unquote: “The government of India’s priority is to tide over this threat. We want that every startup can navigate this storm and will do whatever to make sure they navigate this period..,” Chandrasekhar told participants in a video-conference meeting.
ET reported on Tuesday that Indian startups with funds in SVB are finalising ways to transfer their money elsewhere, and are working with Indian as well as international banks to move their funds out.
Bank locally: Those who attended the meeting on Tuesday told us that the IT ministry pitched the resilience of Indian banks to startups, and urged them to bank locally — a point that the minister raised on Monday, too. During the meeting, several startups informed the minister about the reasons for banking abroad, which include having a large customer and vendor base in the US — a typical trait of companies in the SaaS segment — and the need to have overseas entities to raise funds from foreign VCs.
SVB sued: On Monday, shareholders sued SVB Financial Group, CEO Greg Becker, and CFO Daniel Beck accusing them of concealing how rising interest rates would leave its Silicon Valley Bank unit, which failed last week, “particularly susceptible” to a bank run.
Meanwhile, the bank’s new boss Tim Mayopoulos told clients that the lender is open and conducting business as usual, according to a letter seen by the news agency Reuters.
Picking up the pieces: Apollo Global Management Inc., one of the world’s largest alternative asset managers, has expressed interest in snapping up a book of loans held by SVB. The bank had $73.6 billion of loans as of December 31, 2022, but the size of the loan book Apollo is interested in couldn’t be determined.
Ola offers to replace S1 scooter part amid safety concerns raised by customers
Electric vehicle maker Ola Electric said it is giving customers the option to replace the front fork arm free of cost following several complaints from customers that the part snapped while on road.
Ola’s stance: The company said recently there have been concerns among its users around the safety of its front fork arm, a key component between the body of the vehicle and the wheel. Ola said these concerns are unfounded.
Free upgrade: “To alleviate any concerns that you or any of our community members might have, we are giving an option to our customers to upgrade to the new front fork,” the company said in a statement on Tuesday.
Ola Electric said this is part of its “continuous engineering and design improvement process” and that it has upgraded the front fork design to “enhance the durability and strength”. The company said customers can book an appointment at their nearest Ola Experience Centre or their service centre before visiting.
Also read | California court upholds Uber, Lyft drivers being contractors
I-T department issues Rs 549-crore tax demand notice to Amazon Web Services
The Income Tax (I-T) department has imposed a Rs 549-crore demand notice on Amazon Web Services (AWS), an arm of ecommerce major Amazon that offers cloud services, government officials told us. The department detected that AWS was charging a fee for providing cloud computing services to Indian entities but not paying tax on it.
Tax demand: The department has raised a Rs 190.85 crore tax demand for FY15 and Rs 358.27 crore for FY17, invoking Section 147 of the Income Tax Act. The previous notice was sent in the last week of January, said one official.
The assessing officer can issue a notice under Section 147 of the Income Tax Act if there is reason to believe some income chargeable to tax has escaped assessment.
Reason? The department claims the receipts from cloud computing services were in the nature of royalty and fee for technical services (FTS) and chargeable to tax in India. The official added that the amount also includes interest on the pending tax dues but not a penalty.
Previous demands: In August last year, the income tax department had provisionally attached the fixed deposit accounts of Xiaomi India on grounds of attempted tax evasion. It had argued the company reduced its taxable income in India by paying royalties to entities located outside.
TWEET OF THE DAY
Y Combinator shuts down its late-stage fund
Y Combinator president Garry Tan
Famed Silicon Valley startup accelerator Y Combinator (YC) announced on Tuesday that it will wind down its late-stage investment fund. Tech publication The Information reported that Anu Hariharan and Ali Rowghani, who ran YC’s Continuity Fund, will leave to start their fund.
Quote, Unquote: “YC is rightly known for early-stage investing. In recent years, we have also done some late-stage investing. But late-stage investing turned out to be so different from an early stage that we found it to be a distraction from our core mission. So we’re going to decrease the amount of late-stage investing we do,” Garry Tan, president & CEO of YC, wrote in a blog post.
Layoffs: Tan also informed in the blog post that the shutting down would impact 17 employees at the firm whose roles will no longer be needed.
“Unfortunately, this means we will no longer need some of the roles on the late-stage investing team. Seventeen of our teammates are impacted today. As we make this change in strategy, we want to acknowledge and express our appreciation for their substantial contributions,” he said.
SVB crisis: ET reported on March 12 that at least 40 YC-backed Indian startups had $250,000 to $1 million in deposits with SVB, while more than 20 have over $1 million in deposits. YC has backed more than 200 startups in India, including Razorpay, Zepto, and Meesho, among others.
Tan had written to the US regulators, including treasury secretary Janet Yellen, seeking relief and attention over the collapse of SVB.
New security testing for smartphones, crackdown on pre-installed apps
India plans to force smartphone makers to allow the removal of pre-installed apps and mandate screening of major operating system updates under proposed new security rules, news agency Reuters reported citing government sources.
Why the need? The IT ministry is considering these new rules amid concerns about spying and abuse of user data.
“Pre-installed apps can be a weak security point and we want to ensure no foreign nations, including China, are exploiting it. It’s a matter of national security,” an official told Reuters.
Current norms: Most smartphones come with pre-installed apps that cannot be deleted, such as Chinese smartphone maker Xiaomi’s app store GetApps, Samsung’s payment app Samsung Pay mini and iPhone maker Apple’s browser Safari.
Under the new rules, smartphone makers will have to provide an uninstall option and new models will be checked for compliance by a lab authorized by the Bureau of Indian Standards agency.
Today’s ETtech Top 5 newsletter was curated by Erick Massey and Gaurab Dasgupta in New Delhi. Graphics and illustrations by Rahul Awasthi.