India is considering drafting a comprehensive national e-commerce policy to develop an ecosystem that would support exports and protect consumer interests.
- The Ministry of Electronics and Information Technology (MeitY) was working on a paper on e-commerce, which will soon be put in public domain for debates and comments.
- However, starting negotiations on WTO rules in e-commerce would be premature as the contours of this space are still in the dark,”, according to the Sudhanshu Pandey, Joint Secretary, Ministry of Commerce & Industry.
- Several countries were enthusiastic about negotiating multilateral rules to govern international trade through e-commerce. However, such rules could hurt the interest of most developing countries, including India.
- India is in favour of promoting e-commerce, rulemaking for domestic e-commerce, developing an ecosystem to support exports and protecting the consumers’ interest.
- The developed countries including the US are pushing for inclusion of new issues like investment facilitation and e-commerce in the WTO’s ministerial meeting held in Argentina in December
- India may be very hesitant to be party to e-commerce related negotiations at the WTO level, but the country has been more receptive to such negotiations in at a regional level, particularly the Regional Comprehensive Economic Partnership (Rcep) the proposed free trade agreement with the 10-ASEAN countries (Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) and its six Free Trade Agreements (FTAs) partners, viz. Australia, New Zealand, Japan, China, Korea and India.
Global e-commerce market:
- Global e-commerce market was estimated at $25 trillion of which trans-border component was a minuscule 5% — meaning the remaining 95% was domestic e-commerce trade.
- The size of the Indian e-commerce market was just $30 billion
- The varied arms of the Centre were trying to address the issues pertaining to their domain to help in formulating an overarching national policy for e-commerce.
There were many challenges in starting international negotiations; the key areas which India needed to look at include:
- Data flows, server and data localisation,
- Transfer of technology and mandatory sharing of telecom infrastructure.
- Several nations were in favour of continuing in line with the Work Programme on E-Commerce approved in 1998.
- India needed a harmonised approach at both the WTO and Regional Comprehensive Economic Partnership (RCEP) negotiations while balancing its interests.
What is E-Commerce?
- Electronic commerce or e-commerce is a type of business model, or segment of a larger business model, that enables a firm or individual to conduct business over an electronic network, mainly from the internet.
- Electronic commerce operates in all four of the major market segments: business to business, business to consumer, consumer to consumer and consumer to business.
- E-Commerce processes are conducted using applications, such as email, fax, online catalogues and shopping carts, electronic data interchange (EDI), file transfer protocol and web services and e-newsletters to subscribers.
- Electronic commerce emerged in the early 1990’s and its use has increased at a rapid rate. Today the majority of companies have an online presence.
Some statistics related to e-commerce:
- With $ 681 billion in online retail sales in 2016, China is the largest market for e-commerce globally, followed by the US, and the fastest growing one is India.
- India has an Internet user base of about 243.2 million as of January 2014.
- Despite being third largest user base in the world, the penetration of Internet is low compared to markets like United States, United Kingdom or France but is growing at a much faster rate, adding around 6 million new entrants every month.
- In India, cash on delivery is the most preferred payment method, accumulating 75% of the e-retail activities. The retail market in India is expected to rise from 2.5% in 2016 to 5% in 2020.
Types of e-commerce:
- There are several types of electronic commerce. The most common is business to consumer, in which a business sells products or services directly to consumers over the Internet.
- Another type of electronic commerce is business to business, where companies sell products or services to other companies over the Internet.
- Consumer to business electronic commerce involves consumers selling products or services to businesses.
- There is consumer to consumer e-commerce, which is where consumers sell their products to other consumers.
Some advantages of e-commerce are given below:
- Faster buying and selling procedure, as well as easy to find products.
- Buying and selling day and night
- More reach to customers, there is no theoretical geographic limitations.
- No need of physical company set-ups
- Easy to start and manage a business.
- Customers can easily select products from different providers without moving around physically.
- E-Commerce helps in creating new job opportunities due to information related services, software app and digital products.
- E-commerce offers the consumer or enterprise various information they need, making information into total transparency, and enterprises are no longer is able to use the mode of space or advertisement to raise their competitive edge.
Some disadvantages of e-commerce are given below:
- The invention of faster internet connectivity and powerful online tools has resulted in a new commerce arena-E-Commerce. E commerce offered many advantages to companies and customers but it also caused many problems.
The issues and problems which affect the development of Internet, e-commerce and e-business applications are discussed below:
- There is no guarantee of product quality
- Mechanical failures can cause unpredictable effects on the total processes.
- As there is minimum chance of direct customer to company interactions, customer loyalty is always on a check.
- There are many hackers who look for opportunities, and thus an e-commerce site, service, payment gateways; all are always prone to attack.
- E-commerce is lack of human interaction for customers, especially who prefer face-to-face consumption
Security and Privacy issue:
- The Internet is not a particularly secure place. The information is widely published throughout the Internet which can be used for criminal and near-criminal activities.
- The second aspect is that since the Internet is an open system, details of its underlying technologies are freely available to anybody. This means that the way data passes through the Internet is in the public domain; the consequence of this is that, theoretically, anyone with the right tools can eavesdrop on data passing from one computer on the Internet to another
- Conflict of laws in cyberspace is a major hurdle for harmonization of legal framework for e-commerce around the world.
- Net Neutrality Issue: Net Neutrality is a principle which advocates that Internet service providers and governments should treat all data on the Internet equally, not discriminating or changing deferentially by user, content, site, platform, application, type of attached equipment, or mode of communication.
- E-commerce readiness: It is essential to fully understand the payment and logistical infrastructure, consumer behaviour, retail opportunity and technological developments.
- Scope of growth: It is also important to look at the internet penetration, demographics of the online buying population.
- Barriers to entry: Players should understand the regulatory environment and connect with solution providers, content distribution networks, and digital agencies.
- Competition: There is also a need to do an in-depth assessment of what competitors are doing, their online strategy and the nature of each offering.