[Answered]Discuss the need and significance of draft e-Commerce Rules, 2019 in light of increasing tentacles of e-Commerce in Indian market.

Demand of the question

Introduction. Contextual Introduction.

Body. Mention the need, provisions and issue of draft e-commerce rules, 2019.

Conclusion. Way forward.

E-Commerce is a business model “enables a firm/individual to conduct business over an electronic network, typically the Internet.” The consumer and seller or service provider interaction gets better and efficient.

E-commerce business in India:

  1. E-commerce can be carried out for both wholesale trade or for retail trade (sale towards final consumption).
  2. It can be either Business to Business (B2B) trading or Business to Consumers (B2C) trading.
  3. There is no restriction on conducting e-commerce per se in India. However, certain restrictions exist, if e-commerce is being done by companies receiving FDI.
  4. In India, 100% FDI under automatic route is allowed in Business to Business e-commerce since 2000.
  5. A distinction is made between single brand retail (selling products of a single brand) and multi-brand retail with respect to permission for FDI and e-commerce.

Need for new e-commerce policy:

  1. There is no commonly accepted definition of e-commerce. Further, there is inadequate data on the trade of digital products. Both these shortcomings require effective policy making in the country.
  2. The e-commerce market is expected to reach US$ 64 billion by 2020 and US$ 200 billion by 2026 from US$ 38.5 billion as of 2017. Thus there is a need for clearly laid-down rules for electronic commerce in the country.
  3. E- commerce is currently regulated by multiplicity of government departments such as IT Department, industrial policy, revenue, and RBI. Hence, a national e-commerce policy would consolidate the various norms and regulations to cover all online retailers.
  4. With the increasing online frauds, there is a need to strengthen the regulatory regime for protecting the consumer in the context of e-commerce

Main provisions Draft e-commerce policy:

  1. A common definition of electronic commerce for the purposes of domestic policy-making and international negotiations would be adopted.
  2. It proposes a single legislation to address all aspects of digital economy and a single regulator for issues related to FDI implementation and consumer protection.
  3. It mandates localisation of data in India. The draft also says the government will have access to data stored in India for national security and public policy objectives.
  4. The draft policy proposes 49% FDI under the inventory model for Indian-owned and Indian-controlled firms to sell locally-produced goods on their online platforms.
  5. All active e-commerce portals in India will have to register with e-Central Consumer Protection Authority (CCPA). CCPA shall act as a nodal agency for intra-government coordination, checking frauds within the industry, formulating regulations and more.
  6. On the matter of discounts, the draft policy suggests a period for every discount and offer, beyond which no e-commerce portal can be allowed to provide discounts.
  7. It recommends Centralized registration instead of local registration of e commerce companies.

Issues in e-commerce policy:

  1. Due to mandatory supervision of Competition Commission of India on Merger and Acquisition and regulation on discounts have led to apprehensions of return of license raj.
  2. Data localisation norms in draft policy can discourage international firms to invest in India.
  3. The FDI provision restricted to Indian firms may Influence the much the needed FDI in general and e commerce industry in particular.
  4. The policy state that the Indian government must have access to e-commerce data at all times. This is a dangerous as it allows state surveillance, in the guise of safeguarding the privacy of Indian citizens.
  5. The policy fails to distinguish between personal and collective data and treats all data as one whole.

Thus e-commerce policy need a relook. It need to resolve data issue and also need to relook at regulatory provisions. Discounts regulation can impact the sector and overall growth of Indian economy.

Print Friendly and PDF