E-commerce, social media cos may have to store data locally

Move likely to affect Facebook, Amazon and WhatsApp

Amid concerns of data breach and allegations of data misuse, the Union government is considering asking e-commerce and social media firms to exclusively store customer data locally.

The move could affect global giants that operate in the country such as Amazon, Facebook and its messaging service WhatsApp.

The government is also mulling a single legislation to address all aspects of e-commerce regulation, and it is also exploring the idea of setting up a single regulator to consider all sector-related issues.

The government is also thinking of tightening scrutiny of mergers in the e-commerce sector so that even small deals that potentially distort competition are compulsorily examined by the country’s anti-trust regulator, a Draft National Policy Framework document showed.

The measures come at a time when India is seeing investments flood in from deep-pocketed foreign players, who are eager to tap into the country’s e-commerce space that is forecast to become a $200 billion market in a decade. The Indian e-commerce landscape is currently dominated by Flipkart that is in the process of being bought by US retail giant Walmart - a deal opposed by some local traders who say it will create a monopoly in the retail market and drive mom-and-pop stores out of business.

OSD Anup Wadhawan, the new commerce secretary, said that the recommendations which were discussed today are very comprehensive in nature and covers each aspect of e-commerce such as data flows, consumer protection, grievance redressal, logistics and server localisation. “From Monday’s meeting, a set of recommendations has emerged for further necessary action by the government for formulating e-commerce policy for the country," he said.

“Data generated by users in India from various sources including ecommerce platforms, social media, search engines etc,” would have to be

The government is also thinking of tightening scrutiny of mergers in the e-commerce sector so that even small deals that potentially distort competition are compulsorily examined by the anti-trust regulator

stored exclusively in India, the draft said, adding that the e-commerce industry could be given time to “adjust before localization becomes mandatory”. It also said 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 draft policy follows a proposal last week from a government-appointed panel that all critical personal data on people in India should be processed within the country.

The recommendations by the panel, headed by a former Supreme Court judge, will go before parliament, which is formulating a law designed to enhance data protection.

Among other measures suggested in the draft e-commerce policy is mandating that home-grown card network RuPay be included as a payment option for online transactions.

When asked about the suggestions which came up in the meeting, he said issues such as regulator for the sector, consumer data protection, data localisation and competition were discussed.

"Competition laws in terms of fairness in the market place, in terms of avoiding predatory pricing...Policy will uphold some underlying competition principles," he said adding several recommendations were discussed on consumer data protection.