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