Will Gmail Price Hike Cripple India's MSME industry?

New Delhi, August 17: India has ushered into its Amrit Kal but is the country's MSME sector on the brink of a meltdown? Over 7 million MSME or micro, small and medium enterprises, exist in India and are rapidly moving to adopt digital forms of communication for business operations and even marketing. So, what is the commotion about?

MSME in India are dependent upon Google services, such as Gmail and DropBox for professional usages and pay a service fee to the multinational company for the same. Various MSME businesses and allied companies have stated that Google has raised its services fees to an exuberant amount in less than a year.

Hans India spoke with Mr. Bhagwat Patel, Partner, Siddhi Group of Companies, as to how the rise in prices of Google Products has impacted his business within a year. Mr. Patel, a mechanical engineer by profession, set up his company, Siddhi Engineers Aluminium Precision Tube in 1988 and has been its Technical Director for over three decades. The company manufactures engineering products for different segment applications such as industrial engineering, aerospace and defence, telescopic mast, waveguide for satellite communication, alucore cot (cotton spinning industry), automobile components, among others.

The company's manufacturing unit is based in Ahmedabad and has closely worked with Defence Research and Development Organisation (DRDO) and Bharat Electronic Limited. The company has also made alloy tubes for Akash Missile, a medium-range mobile surface-to-air missile system developed by the DRDO. Like many MSME, Mr. Patel's company has also adopted digital space to avail necessary services such as cloud computing. Electronic Mail or Email is the pillar of a company's business operations without which it may not be able to operate efficiently.

"My business (correspondence) is running 100% via email… You know very well, every business, whether small or medium, is running on exchange of email. I receive material orders via mail. We get our payment receipt through email intimation. We don't get physical mail in a post. Digital world is the essence of daily life," Mr. Patel said.

Mr. Patel explained that Google Inc has raised prices on its services. To break it down further, MSME company has to pay per person charges on Gmail through which a registered employee can use upto 30 GB of email space at a price of Rs. 1,500 which was later hiked to Rs. 2,500 in 2020. For an additional 100 GB space, Google would charge Rs. 1,300 extra per person. So, if a company requires 50 to 60 Gmail accounts for its employees, Rs. 2,500 rupees (per user) would be charged by Google, and those needing extra cloud storage, the company will have to bear additional expense of Rs. 1,300 to expand the usage upto 100 GB for each I.D., making it a total of Rs. 3,800 for 130 GB storage space.

But now, Google has modified its package and instead of offering 100 GB space, it now allots 1 TB (terabyte) in the additional package at the cost of four times. So, for 2 TB space, a company will have to pay upto Rs. 10,000 per person or per Gmail I.D. The Gmail charges are not flexible, and each employee's Gmail I.D will be upgraded, irrespective of their usage and requirement.

Mr. Patel's company, in the previous years, was paying upto Rs. 1,00,000 to Google for Gmail services but now is compelled to pay upto Rs. 4 to 5 lac rupees to avail the service. Mr. Patel told Hans India, that over the time the company's digital expenses have gone up, and constitutes a huge part of the overall business cost.

"Out of all digital investment, I think mail services constituted about 7 to 8 % of it. After an increase in the mail services cost by Gmail, it now goes upto 30%, and this is going to be an unbearable cost. We have to think about another alternative," Mr. Patel explained.

Patel has said that all the mails received and sent are done via electronic channels. The company's technical director also said that one of its directors faced major issues with their Gmail I.D. as Google restricted the storage space. The email I.D could not receive correspondence beyond and the company was compelled to buy more cloud space to keep the Inbox and Outbox working.

India's MSME segment has been hailed as the backbone of the country's economy but given circumstances, the compulsion to spend more budget to keep the digital mode of communication open may hurt their business. On Thursday, an open letter to Google was issued by Vishal Shah, Founder and CEO, Synersoft Technologies to highlight the plight of several MSMEs in India, including Mr. Patel's company, due to sudden hike in the prices of Google online services. The open letter has also been copied to the Competition Commission of India, Ministry of MSMEs, IT & Broadcasting, Science & Technology, Industry & Commerce, and Finance.