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Explain one way the Indian government might use legislation to protect the Indian ridesharing market from non-Indian businesses. - Edexcel - A-Level Business - Question 2 - 2022 - Paper 1
Question 2
Explain one way the Indian government might use legislation to protect the Indian ridesharing market from non-Indian businesses.
Worked Solution & Example Answer:Explain one way the Indian government might use legislation to protect the Indian ridesharing market from non-Indian businesses. - Edexcel - A-Level Business - Question 2 - 2022 - Paper 1
Step 1
Protectionism and Legislation
Answer
The Indian government can adopt protectionist measures to shield domestic ridesharing companies like Ola from foreign competitors, such as Uber. Protectionism includes policies that make it harder for foreign businesses to operate in the local market. Legislation can be used to restrict foreign investments, creating a more favorable environment for local companies. This might involve setting regulations that require foreign companies to partner with local firms or limiting their market share.
Step 2
Addressing Foreign Investment
Answer
There have been calls for the government to limit foreign investment by multinational companies in the Indian ridesharing market. By implementing legislation that caps the amount of equity that foreign companies can hold, the Indian government could protect domestic firms from being overshadowed by their foreign counterparts.
Step 3
Specific Safety Regulations
Answer
The government could introduce specific safety regulations that apply only to foreign ridesharing companies. This might include stricter requirements for safety provisions and insurance that Indian firms may not have to meet. Such regulations would aim to tilt the playing field in favor of domestic providers.
Step 4
Trade Tariffs and Quotas
Answer
While direct trade tariffs may not apply to ridesharing services, the government could impose tariffs on equipment or technology used by foreign firms. This would make it more costly for foreign businesses to operate in India, giving an advantage to local companies that do not face the same charges.