Sharp Re­ac­tions:

Though well-in­tended, the draft e-com­merce pol­icy gets flak from most of the stake­hold­ers and forces the govern­ment to go in for a re­view.

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Though wellintended, the draft ecom­merce pol­icy gets flak from most of the stake­hold­ers and forces the govern­ment to go in for a re­view.

Adraft e-com­merce pol­icy wants on­line re­tail­ers, such as Ama­zon.com, search en­gines, like Google, and so­cial me­dia plat­forms to store lo­cally data gen­er­ated by users in In­dia. The lo­cal stor­age con­di­tion will en­able the govern­ment ac­cess to such data for na­tional se­cu­rity and pub­lic pol­icy ob­jec­tives.

Ac­cord­ing to the 19-page draft pol­icy: "a level play­ing field needs to be pro­vided to do­mes­tic play­ers by en­sur­ing that for­eign web­sites in­volved in e-com­merce trans­ac­tions from In­dia also fol­low the same rules, in­clud­ing pro­ce­dures for pay­ment sys­tems, such as two-fac­tor au­then­ti­ca­tion, as in case of do­mes­tic com­pa­nies". The draft pol­icy rec­om­mends strength­en­ing reg­u­la­tory vig­i­lance for pay­ment sys­tem, curb­ing dis­counts in on­line re­tail and sin­gle leg­is­la­tion to en­com­pass all as­pects of e-com­merce with a sin­gle reg­u­la­tor to gov­ern the in­dus­try.

Con­tentious pro­pos­als

Stat­ing that data is the oil of the dig­i­tal econ­omy, the draft pol­icy notes that com­mu­ni­ca­tion over mo­bile phones us­ing mo­bile ap­pli­ca­tions and other real-time ex­changes not only gen­er­ates a vast ar­ray of data, in­clud­ing phys­i­cal lo­ca­tion, fi­nan­cial de­tails and con­sumer pref­er­ence, but also cre­ates a dy­namic pro­file of an in­di­vid­ual user.

The in­di­vid­ual's pro­file can be used for a va­ri­ety of com­mer­cial pur­poses, such as pre­ci­sion mar­ket­ing, tar­geted ad­ver­tise­ments and cred­it­wor­thi­ness as­sess­ment. The his­tory of brows­ing and search by con­sumers also gen­er­ate rich in­for­ma­tion on con­sumer pref­er­ences and, at times, their po­ten­tial pur­chas­ing power. By track­ing the search his­tory, on­line re­tail web­sites are able to tar­get con­sumers with tailor-made mar­ket­ing con­tent. Data gen­er­ated by ac­tiv­ity in one area can pro­vide a com­pet­i­tive edge for a new busi­ness in an­other area. Ac­cess to data has emerged as one of the main de­ter­mi­nants of suc­cess of an en­ter­prise in the dig­i­tal econ­omy.

The draft wants data gen­er­ated by users in In­dia from var­i­ous sources, in­clud­ing e-com­merce plat­forms, so­cial me­dia, search en­gines and so on to be stored ex­clu­sively in In­dia and suit­able frame­work de­vel­oped for shar­ing the data within the coun­try. Such data should be shared with star­tups, meet­ing the stip­u­lated cri­te­ria. "The govern­ment would have ac­cess to data stored in In­dia for na­tional se­cu­rity and pub­lic pol­icy ob­jec­tives, sub­ject to rules re­lated to pri­vacy, con­sent, etc," the adds.

The draft pol­icy also calls for set­ting up of a Cen­tral Con­sumer Pro­tec­tion Au­thor­ity (CCPA) that will reg­is­ter all do­mes­tic and for­eign e-com­merce op­er­a­tors and pro­vide a fo­rum for con­sumers to reg­is­ter un­re­solved com­plaints. A law to gov­ern un­so­licited com­mer­cial e-mails will also be framed. Le­gal re­dress mech­a­nism for con­sumer com­plaints is be­ing made more ef­fec­tive by assess­ing the fea­si­bil­ity of es­tab­lish­ing e-con­sumer courts.

"The grounds for seek­ing dis­clo­sure of source code to the govern­ment would be ex­panded to in­clude sit­u­a­tions of un­fair trade prac­tice, fraud and com­pli­ance with do­mes­tic reg­u­la­tory re­quire­ments," the draft pol­icy adds.

Bal­anc­ing act

The draft has been crit­i­cised in some quar­ters, prompt­ing the Union Com­merce Min­istry to tweet that "an­other

round of con­sul­ta­tion with stake­hold­ers" will be done to ad­dress their con­cerns. "We would like to dis­cuss and con­sider the in­puts from all stake­hold­ers on the up­com­ing draft e-com­merce pol­icy," Com­merce Min­is­ter Suresh Prabhu had tweeted re­cently.

The pro­posed e-com­merce pol­icy drafted by the Com­merce Min­istry is set to see a num­ber of changes with the Prime Min­is­ter's Of­fice (PMO) step­ping in to take on board con­cerns raised by sec­tions of the in­dus­try as well as the govern­ment. The PMO, which had con­vened a meet­ing of se­nior of­fi­cials from key min­istries and de­part­ments, in­clud­ing com­merce, in­dus­try, con­sumer af­fairs, IT, fi­nance and also the NITI Aayog re­cently, is likely to keep a keen eye as the Com­merce Min­istry in­cor­po­rates changes in the draft.

Many sec­tions in the govern­ment, in­clud­ing the IT Min­istry, the Con­sumer Af­fairs Min­istry, the Fi­nance Min­istry and also the NITI Aayog, have raised cer­tain ob­jec­tions to some pro­pos­als in the first draft. The PMO will have a say on how valid these ob­jec­tions are and the changes that are to be made," re­veals a govern­ment of­fi­cial, who does not want to be iden­ti­fied.

In fact, NITI Aayog CEO Amitabh Kant had said in an in­ter­ac­tion with the me­dia re­cently that the govern­ment should not get into the mar­ket by look­ing at mi­cro is­sues of dis­counts and pric­ing. The sug­ges­tion made in the draft e-com­merce pol­icy of in­tro­duc­ing a sun­set clause for of­fer­ing deep dis­counts to cus­tomers has also not gone down well with many big play­ers, such as Ama­zon and Flip­kart.

More­over, a pro­posal that re­stric­tions on e-com­merce mar­ket­place not to in­flu­ence di­rectly or in­di­rectly the sale price of goods and ser­vices should be ex­tended to group com­pa­nies of the e-com­merce mar­ket­place is also a bone of con­tention for many. An­other con­tro­ver­sial sug­ges­tion is al­low­ing for­eign eq­uity up to 49 per cent in a lim­ited in­ven­tory-based B2C model. Al­though a caveat that the plat­forms should be con­trolled by In­dian man­age­ment has also been pro­posed, the do­mes­tic in­dus­try has op­posed the sug­ges­tion on the ground that it con­tra­dicts the govern­ment's stated in­tent to strengthen Press Note 3, which bars any for­eign di­rect in­vest­ment (FDI) in in­ven­tory-based, on­line re­tail.

The IT in­dus­try, on the other hand, is deal­ing with com­plaints from in­dus­try bod­ies, which have ob­jected to data lo­cal­i­sa­tion pro­pos­als which state that the data gen­er­ated by users in In­dia from var­i­ous sources, in­clud­ing e-com­merce plat­forms, so­cial me­dia and search en­gines, should be stored ex­clu­sively in In­dia and a frame­work must be de­vel­oped for shar­ing the data within the coun­try.

As the de­bate over the draft e-com­merce pol­icy rages on, In­dia's e-com­merce mar­ket, cur­rently val­ued at about $27 bil­lion (nearly Rs 1,95,000 crore), has emerged as one of the fastest grow­ing in the world. Over 50 crore In­di­ans are ex­pected to come on­line in the next wave of in­ter­net users and shop­pers, ac­cord­ing to a new re­port re­leased jointly by Bain & Co, Google and Omid­yar Net­work re­cently. Data con­sump­tion on the mo­bile phone is al­ready on a par with that in de­vel­oped mar­kets at 8 gb per month per user. Yet only over a third - about 13 crore - of In­dia's cur­rent 39 crore in­ter­net users trans­act on­line, the re­port adds, sug­gest­ing mas­sive un­tapped op­por­tu­nity.

The draft e-com­merce ap­pears to have its heart in the right place, given many noble in­ten­tions that it re­flects. How­ever, heart alone is not suf­fi­cient to deal with com­plex re­al­i­ties of busi­ness. A nim­ble mind is most es­sen­tial for the pol­icy to mir­ror the ground re­al­i­ties. The govern­ment is rightly con­cerned to level the play­ing field, pro­tect pri­vate, sen­si­tive data of con­sumers and en­sure that small on­line re­tail­ers as well as brick-and-mor­tar re­tail­ers are not dec­i­mated by big, global on­line play­ers. How­ever, in­ter­ests of global e-com­merce gi­ants can­not be ig­nored al­to­gether. A fine blend of heart and mind is the need of the hour to bal­ance dif­fer­ing in­ter­ests. The govern­ment needs to get the blend per­fect as it goes about re­fram­ing the e-com­merce pol­icy.

"We would like to dis­cuss and con­sider the in­puts from all stake­hold­ers on the up­com­ing draft e-com­merce pol­icy."

SURESH PRABHU

Union Com­merce Min­is­ter "The govern­ment should not get into the mar­ket by look­ing at mi­cro is­sues of dis­counts and pric­ing."

AMITABH KANT

CEO, NITI Aayog

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