
To Understand Jio, You Need to Understand Reliance - simonpure
https://diff.substack.com/p/to-understand-jio-you-need-to-understand
======
reactspa
This article delivers a very good understanding of what it's like to be an
entrepreneur in India. Kudos.

One of the coolest things I've read about Jio is something I read on a
previous post on HN: that the name and logo were designed to be the mirror
image of oiL.

> Later, Reliance profited from other parts of India’s protectionist regime.
> Their synthetic fiber arbitrage worked like this: to make manufacturers
> self-sufficient, the Indian government allowed them to import raw materials
> only in proportion to the goods they exported. Ambani persuaded the
> government to let him import polyester filament yarn in proportion to the
> nylon goods he exported. Nylon was available cheaply in India, polyester
> filament was 600% more expensive when locally sourced in India than its cost
> when imported. So Ambani set up a closed loop: make nylon clothes from
> locally-sourced materials; sell them abroad; use the import quota to import
> polyester filament; sell it at home. And, just to be safe, he took care of
> the demand side, too: at least according to The Polyester Prince, Ambani
> sent money abroad to buy his own products at duty-free ports, and then sold
> them for cheap, gave them away, or even dumped them in the ocean.

All true except in many cases, the exporters didn't need to actually export
anything. If the right bribes were paid (Congress Party's modus operandi), it
was all a "receipts game"... you just needed receipts that "proved" that you
had sent goods abroad, that money had hit the bank, etc.

There was a huge fertilizer subsidies scam in India a couple decades ago which
was another case of "receipts game". (The scam involved subsidies [given by
the government] for using fertilizer [similar to Agricultural Subsidies in the
USA]. Turns out that most of the subsidies were going to politicians who
weren't using any fertilizer, they were just providing the correct receipts
that "proved" that they had bought -- and presumably used -- fertilizer.)

Finally, I worked at a bank in India for a short while, just after the major
devaluation of the currency in the nineties (the Indian Rupee was devalued by
over 50% in two phases). Around midnight, the day before the surprise
announcement by the Reserve Bank of India (and the Government of India), a
bunch of treasury operations staff at the bank got marching orders to go to
the office and sell off, as much as they could, the Indian Rupee, and buy
foreign currencies. They worked all night. The client made millions from this
bank's operations alone. The client? Reliance.

~~~
pankajdoharey
India is a tough market with overregulation and corruption as the article
points out. Being an Entrepreneur must be hard in India.

~~~
raghava
Jeff Bezos himself isn't spared from Jio tax[1], what chance does a measly
entrepreneur stand against Ambani and Jio!

[1][https://techcrunch.com/2020/07/23/amazon-reportedly-in-
talks...](https://techcrunch.com/2020/07/23/amazon-reportedly-in-talks-to-
buy-a-9-9-stake-in-indias-reliance-retail/)

------
samdung
For those looking for the banned book "The Polyester Prince: The Rise of
Dhirubhai Ambani" ... here's the link to donwload:
[https://www.dropbox.com/s/e1kdqqnqpl9uhfv/The-Polyester-
Prin...](https://www.dropbox.com/s/e1kdqqnqpl9uhfv/The-Polyester-
Prince.pdf?dl=0)

~~~
pankajdoharey
The book doesnt seem to be banned [https://www.amazon.in/Polyester-Prince-
rise-Dhirubhai-Ambani...](https://www.amazon.in/Polyester-Prince-rise-
Dhirubhai-Ambani/dp/B073N397G9)

What you are posting is a pirated copy.

~~~
sub7
lol the book is selling for Rs30,000 used on amazon. New books cost Rs300.

What you are posting is a self certificate of ignorance.

~~~
pankajdoharey
Are you endorsing piracy on HN?

------
techfoolery
Agreed with the premise of title. I think Vedica Kant does a more
comprehensive job laying out where Reliance comes from & how it was shaped in
her substack newsletter two-parter:

[https://hind.substack.com/p/reliance-
origins](https://hind.substack.com/p/reliance-origins)

[https://hind.substack.com/p/from-oil-to-
jio](https://hind.substack.com/p/from-oil-to-jio)

------
agustamir
> That JIO has designed and developed a complete 5G solution from scratch

Is that really true, or just some marketing hogwash? If true, then why is Jio
not building a Huawei and helping install 5G all over the world? From what I
know, very few companies have the technology to build 5G infrastructure.

~~~
kolencherry
Somewhat. It sounds like they have designed some of their own hardware [0] and
they're working on building their own IMS stack [1]. I think Samsung is still
their radio vendor.

[0]
[https://economictimes.indiatimes.com/industry/telecom/teleco...](https://economictimes.indiatimes.com/industry/telecom/telecom-
news/jio-develops-in-house-5g-tech-to-reduce-costs/articleshow/74543900.cms)

[1]
[https://telecom.economictimes.indiatimes.com/news/reliance-j...](https://telecom.economictimes.indiatimes.com/news/reliance-
jio-builds-in-house-5g-iot-tech-to-reduce-dependence-on-foreign-gear-replaces-
nokia-oracle-tech-with-own-tech/74534777)

------
fareesh
If India is Detroit in the Robocop universe, Reliance is OCP.

~~~
mangamadaiyan
Oh, for an Alex Murphy.

------
areoform
> Reliance’s timing was uncanny: when tariffs went up, Reliance happened to
> have stockpiled the goods in question; when their inventories ran down,
> tariffs dropped. It’s unclear when the system switched from Reliance knowing
> what the government would do to Reliance deciding what the government would
> do, but clearly at the peak of their power they were able to call the shots.

> As a public company, Reliance engaged in some novel financial
> engineering—issuing convertible bonds with ambiguous conversion terms,
> exploiting those terms to get cash when necessary, and at one point
> cornering the market in their own stock. Perhaps the high point of
> Reliance’s financial engineering was in 1986, when the company publicly
> stated that earnings would rise, then found that earnings weren’t rising
> after all. The solution: an 18-month fiscal year. Record profits secured.

> Jio’s fundraise was opportunistic in two directions: Reliance wanted to
> delever, and outside investors wanted access to India’s market. It’s not a
> coincidence that this fundraising occurred at the same time that tensions
> with China erupted; a country that can ban TikTok and restrict Chinese
> investments can do the same to other countries, too. And, of course, it
> helps that Jio is getting more liquidity at the same time that its
> competitors mysteriously found themselves on the hook for giant fines.

For clarity's sake, usually bribery, securities fraud, money laundering,
revenue recognition fraud and other demonstrably fraudulent activities gets
you put in jail. Not lauded as being clever.

If the investments put in by Facebook and Google are used to manipulate the
local political environment, does this mean that they're on the hook for
liability via 15 U.S.C. § 78dd-1, et seq.? Or, the Foreign Corrupt Practices
Act? Do the firms have liability, or are they shielded via virtue of the
"investment"?

-

Some Google searches later, one of their executives, p̶r̶e̶s̶u̶m̶a̶b̶l̶y̶ ̶a̶
̶f̶a̶m̶i̶l̶y̶ ̶m̶e̶m̶b̶e̶r̶, tried to get someone killed by calling in the
mob, [https://www.indiatoday.in/magazine/cover-
story/story/1989083...](https://www.indiatoday.in/magazine/cover-
story/story/19890831-bombay-dyeing-reliance-feud-ril-executive-arrested-on-
charge-of-conspiring-to-kill-nusli-wadia-816444-1989-08-31)

[https://www.economist.com/leaders/2014/08/02/an-unloved-
bill...](https://www.economist.com/leaders/2014/08/02/an-unloved-billionaire)

Their history is hard to believe and harder to square away. Will this lower FB
and G's liability shield? Any thorough due diligence should easily uncover
more in this wretched hive of scum and villainy.

~~~
rajekas
A little bit more Googling will tell you that Kirti Ambani, the man accused of
ordering the hit, was no relative of Dhirubai, the Godfather.

Nusli Wadia, the man he was supposedly getting killed, is the head of an
important textile firm himself and the grandson of the founder of Pakistan.

The scandal of which this episode is but one battle, led to the downfall of
Rajiv Gandhi's government and triggered the long downfall of the Congress
party, which is how Dhirubai's son Mukesh finds himself so close to the
current regime whose predecessors, ironically, benefited enormously from the
alleged chumminess between the father Ambani and Rajiv.

Wretched hive of scum and villainy seems a bit overwrought though; par for the
course for robber barons and way less scummy and violent than Andrew Carnegie
or Cecil Rhodes and other titans of western industry.

Plus they haven't caused coups in Central American countries. Yet. Though I
wouldn't mind if Mukesh bhai bought England and replaced the Union Jack with
the Tricolour.

~~~
pankajdoharey
> Though I wouldn't mind if Mukesh bhai bought England and replaced the Union
> Jack with the Tricolour.

I dont think he has enough buck in the bank to buy an entire country.

~~~
techie128
> I dont think he has enough buck in the bank to buy an entire country.

give it some time

------
eunos
So will Ambani become the India's tech Godfather. If that so then it is
interesting if we compare India's tech scene and China's.

For example, the Chinese tech giants (Jack Ma, Pony Ma, Robin Li, et al) seems
come from zero, instead of other established rich folks (Dalian Wanda group,
Li Ka Shing, Walter Kwok).

~~~
sub7
Mukesh does nothing if he can't be a monopoly.

He will allow thousands to succeed or fail under him, but nobody will
participate without paying their tax.

------
forgot_user1234
I am stuck in a small city near Delhi.

It's hard to find things like olive oil anywhere except for Jio app. Atleast I
am thankful for that.

------
known
Jio/Reliance is
[https://en.wikipedia.org/wiki/Oligarchy](https://en.wikipedia.org/wiki/Oligarchy)

------
michaelyoshika
tl;dr: a monopoly with deep ties to government.

------
known
And to understand Reliance, you need to understand Caste system in India;

TL;DR

Casteism is an Organized mafia in India since 700 BC
[https://archive.is/PdiUF](https://archive.is/PdiUF)

BC/SC/ST people, 80% in India, were denied education/employment and basic
human rights for 2700+ years as per
[https://en.wikipedia.org/wiki/Rigveda](https://en.wikipedia.org/wiki/Rigveda)
in
[https://en.wikipedia.org/wiki/Timeline_of_Indian_history](https://en.wikipedia.org/wiki/Timeline_of_Indian_history)

In 1932
[https://en.wikipedia.org/wiki/B._R._Ambedkar](https://en.wikipedia.org/wiki/B._R._Ambedkar),
Architect of the Constitution of India demanded a separate country (not
Reservations/Affirmative Action) for them
[https://en.wikipedia.org/wiki/Communal_Award](https://en.wikipedia.org/wiki/Communal_Award)

[https://en.wikipedia.org/wiki/Mahatma_Gandhi](https://en.wikipedia.org/wiki/Mahatma_Gandhi)
opposed it, bullied and bribed them with
[https://en.wikipedia.org/wiki/Poona_Pact](https://en.wikipedia.org/wiki/Poona_Pact)

~~~
kcsomisetty
I would acknowledge that opportunities were denied based on caste, But 'Denied
education for 2700+ years' is a strong claim with out any proof is taking your
argument little too far.

Aatukuri Molla was a celebrated poet, not from upper caste.

She faced initial resistance not because of her caste, but because of her
choice not to use sanskrit while translating the epic ramayana to Telugu. Once
she proved her talent, she was granted audience to emperor and awarded with
title 'Gem of Poets'. Her version of ramayana is still popular to this day.

Annamacharya, is also another poet who being a brahmin, also faced similar
resistance from established scholars because he composed his poems with local
lingo rather than sanskrit.

[https://en.wikipedia.org/wiki/Atukuri_Molla](https://en.wikipedia.org/wiki/Atukuri_Molla)
[https://en.wikipedia.org/wiki/Annamacharya](https://en.wikipedia.org/wiki/Annamacharya)

Dont confuse elitism with casteism.

------
haltingproblem
This is a bizarre article in the flavor of NY Times India coverage which
cannot look at India except through the lens of cow, caste and curry. After
all how could a third world entrepreneur build the biggest data network in the
world for the cheapest price? Not once but twice!

One instance of how the article is riddled with errors:

 _" From 1980 to 1985, the number of equity investors in India rose from 1m to
5m, and by 1985 1 million of them owned shares of Reliance. Since equity
investors are likely to be middle class and above, this gave Reliance a
broader political constituency: instead of buying individual regulators with
bribes, they nudged the electorate with dividends."_

As per [1] 240 _million_ people cast votes in the 1985 election. So with 0.25%
of the total vote scattered across hundreds of constituencies Reliance was
able to swing the electorate which is fractured across die-hard political
affiliations, economic interests, religions and caste hierarchies. Sure
whatever.

Perhaps it is hard for the author to admit that Mukesh Ambani, the current CEO
of Relaince/Jio and son of the founder, is a unparalleled operational genius.
He singlehandedly led the team that rolled out the biggest refinery in the
world in Gujurat in 1999 [2] where "biggest in the world" and India never went
together for anything manufactured.

He also rolled out Reliance Communications in the 1990s which was then the
cheapest mobile provider by an _order_ of magnitude [3]. That business went to
his brother Anil in the family split in 2006 and Anil ran it into the ground.
When their fraternal non-complete expired Mukesh built out Jio which again
dropped data pricing by an order of magnitude and made voice free. Jio now has
the cheapest data in the world [4]. This bankrupted all his competitors who
were centi-billion market cap companies and forced them to drop prices and
merge. It also bought hundreds of millions of extremely poor Indians to
feature phone ownership for the first time. They had the opportunity to what
he did but could not. They also wielded the same power with the bureaucracy
that he did but were not able to leverage it.

I certainly would like 12GB of data $1.23. Heck, even 10x that is a bargain.
But instead of pondering what he did the author spins dark tales of
subterfuge, mafia, corruption and bribes.

 _Eye-roll_

[1] [https://www.idea.int/data-tools/country-
view/146/40](https://www.idea.int/data-tools/country-view/146/40)

[2] [https://www.bechtel.com/projects/jamnagar-oil-
refinery/](https://www.bechtel.com/projects/jamnagar-oil-refinery/)

[3]
[https://www.rediff.com/money/2002/dec/27ril1.htm](https://www.rediff.com/money/2002/dec/27ril1.htm)

[4] [https://www.cable.co.uk/mobiles/worldwide-data-
pricing/](https://www.cable.co.uk/mobiles/worldwide-data-pricing/)

