Govt plan­ning na­tional e-com­merce reg­u­la­tor

Na­tional pol­icy frame­work rec­om­mends manda­tory data lo­cal­iza­tion and tax in­cen­tives for data cen­tres


Ana­tional reg­u­la­tor for e-com­merce, manda­tory data lo­cal­iza­tion and tax sops for data cen­tres are part of an up­com­ing leg­is­la­tion gov­ern­ing all as­pects of elec­tronic com­merce in the coun­try, the draft of a na­tional pol­icy showed. The reg­u­la­tor will en­sure con­sumer pro­tec­tion and com­pli­ance with for­eign in­vest­ment caps in e-com­merce.

The na­tional pol­icy frame­work in this re­gard, pre­pared by a task force headed by com­merce sec­re­tary Rita Teao­tia, was dis­cussed on Mon­day, 30 July, by a think tank, headed by in­dus­try min­is­ter Suresh Prabhu, set up for the pur­pose. The draft will be fur­ther fine-tuned be­fore it is sent for in­ter-min­is­te­rial con­sul­ta­tions.

The govern­ment has been striv­ing to build con­sen­sus on an e-com­merce pol­icy to mit­i­gate the pol­icy vacuum on key is­sues re­lated to the sec­tor as well as to ef­fec­tively re­spond to a pro­posal for mul­ti­lat­eral dis­ci­pline in e-com­merce at the World Trade Or­ga­ni­za­tion (WTO) as var­i­ous govern­ment de­part­ments have con­tra­dic­tory views on the mat­ter.

While the draft e-com­merce pol­icy has strongly rec­om­mended data lo­cal­iza­tion, it has sug­gested a two-year sun­set pe­riod for the


A sun­set clause defin­ing max­i­mum du­ra­tion of by e-com­merce firms to be framed for in­cen­tiviz­ing do­mes­tic data stor­age in In­dia Govern­ment would have ac­cess to data stored in In­dia for and pub­lic pol­icy ob­jec­tives in­dus­try to ad­just be­fore lo­cal­iza­tion rules be­comes manda­tory. It has also sug­gested di­rect and in­di­rect tax in­cen­tives as well as ac­cord­ing in­fra­struc­ture sta­tus to data cen­tres to en­cour­age do­mes­tic data stor­age.

The move will help pri­vate sec­tor com­pa­nies com­ply with the norms laid down by the Srikr­ishna com­mit­tee on data lo­cal­iza­tion. The 10-mem­ber ex­pert group headed by for­mer Supreme Court judge B.N. Srikr­ishna, which sub­mit­ted the draft bill ti­tled The Per­sonal Data Pro­tec­tion Bill, 2018, to the min­istry of in­for­ma­tion and tech­nol­ogy (Me­ity) on Fri­day ne­ces­si­tates com­pa­nies to store a copy of a user’s per­sonal data in the coun­try.

“It is a very en­cour­ag­ing move to give some time to the do­mes­tic in­dus­try to come to terms with the data stor­age pro­ce­dures be­fore ac­tu­ally im­pos­ing the leg­is­la­tion. How­ever, it is im­por­tant to care­fully ex­am­ine which com­pa­nies ac­tu­ally qual­ify for this,” said Am­ber Sinha, lawyer and se­nior pro­gramme man­ager at Cen­tre for In­ter­net and So­ci­ety (CIS), a Bengaluru-based think tank.

Both the draft e-com­merce pol­icy and the Srikr­ishna panel have sug­gested that the govern­ment would have ac­cess to data stored in In­dia for na­tional se­cu­rity and pub­lic pol­icy ob­jec­tives sub­ject to rules re­lated to pri­vacy, and con­sent.

To en­cour­age mi­cro, small and medium en­ter­prises, the draft e-com­merce pol­icy rec­om­mends al­low­ing them to fol­low in­ven­tory-based mod­els for sell­ing lo­cally pro­duced goods through an on­line plat­form.

Such com­pa­nies may also be al­lowed up to 49% for­eign in­vest­ment. Cur­rently, e-com­merce plat­forms are al­lowed only to fol­low mar­ket­place model where 100% FDI is al­lowed. How­ever, the govern­ment has so far not per­mit­ted any FDI in in­ven­tory-based mod­els. In what could worry the e-com­merce com­pa­nies, the draft pol­icy rec­om­mends that the Com­pe­ti­tion Com­mis­sion of In­dia con­sider suit­ably amend­ing the thresh­olds so that com­pe­ti­tion-dis­tort­ing merg­ers and ac­qui­si­tions below the ex­ist­ing thresh­old also get manda­to­rily ex­am­ined by it in case of e-com­merce en­ti­ties. “For such en­ti­ties, thresh­olds based on other vari­ables (such as ac­cess to data) which are more rel­e­vant in this area, would be con­sid­ered,” it added.

The task force has also rec­om­mended that the goods and ser­vices tax (GST) pro­ce­dures for e-com­merce be sim­pli­fied by al­low­ing cen­tral­ized reg­is­tra­tion in­stead of lo­cal reg­is­tra­tion. “The rel­e­vant GST pro­vi­sions would be mod­i­fied in or­der to cre­ate a level-play­ing field be­tween on­line and off­line de­liv­ery of goods and ser­vices for the pur­pose of GST,” it said.

Cur­rently, MSMES with rev­enue of less than ₹ 20 lakh a year are not sub­ject to GST if they sale off­line whereas they have to pay GST if they sell goods on on­line plat­forms. Shru­tika Verma con­trib­uted to this story.


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