National E-commerce Policy: India

The world of electronic commerce (e-commerce) is rapidly evolving, and India is no exception to this digital transformation. As the Indian e-commerce landscape continues to expand, the need for a comprehensive regulatory framework becomes imperative. The Ministry of Commerce and Industry is gearing up to introduce the National E-commerce Policy, a groundbreaking initiative that aims to shape the future of e-commerce in the country. This policy is poised to be a game-changer, aligning with existing national initiatives like Make in India, Startup India, Skill India, and Digital India. Let’s delve into the key aspects of this upcoming policy and its potential impact on the e-commerce ecosystem.

Setting the Stage: The Growth of E-commerce in India

Electronic commerce has emerged as a potent force propelling India’s economic growth and development. Market estimates project that the Indian e-commerce industry will reach a valuation of USD$99 billion by 2024, with projections soaring to an impressive USD$300 billion by 2030[1]. Recognizing the pivotal role that e-commerce plays in India’s economic landscape, the government has undertaken the task of formulating a comprehensive regulatory framework to safeguard and enhance various facets of e-commerce operations, from consumer protection to data privacy.

The Draft National E-commerce Policy: A Glimpse into Its Genesis

In 2019[2], the Ministry of Commerce and Industry released a draft of the National E-commerce Policy, laying out a roadmap for the future of e-commerce in India. This policy draft revolved around the following broad areas, each integral to fostering a thriving e-commerce ecosystem[3]:

• Data: The policy emphasized the significance of data in the e-commerce sector and proposed measures to regulate data flow, localization, and cross-border transfers. It underlines the importance of safeguarding data as a national asset, just as any other natural resource, for the benefit of Indian citizens and businesses. Data ownership and privacy remain central to the policy’s agenda. It mandated that digital economy participants with access to Indian data must nominate local representatives responsible for the company’s affairs in India. This move aimed to enhance law and order and ensure compliance with regulations. Additionally, the policy highlighted the significance of privacy protection. It required e-commerce entities to disclose the purpose of data collection in a simple and understandable manner, empowering consumers to make informed choices about sharing their data.
• Empowering Small Firms and Start-ups: To foster the integration of small businesses and start-ups into the digital sector, the policy recommended granting them ‘infant-industry’ status. This recognition aimed at providing these entities with benefits that facilitate their onboarding into the digital economy. Access to data lies at the heart of this approach, enabling MSMEs and start-ups to leverage digital platforms and best practices effectively.
• Consumer Protection: Consumer protection took centre stage in the policy’s framework. It emphasized genuine reviews, anti-counterfeiting measures, and e-Courts for grievance redressal. The policy recognized the importance of combating fraudulent ratings and reviews while ensuring swift resolution of consumer grievances. Transparency in data collection practices is also prioritized, ensuring that consumers understand why their data is being collected.
• Stimulating the Domestic Digital Economy: The policy’s recommendations to stimulate the domestic digital economy reflected a forward-looking approach. Formulating domestic industrial standards for smart and IoT devices aligns with the goal of enhancing consumer protection and interoperability. Incorporating Artificial Intelligence (AI) into logistics through automation demonstrated the draft policy’s commitment to efficiency and digital integration. The integration of online customs clearance, along with measures to promote exports, underscores India’s vision to become a global e-commerce exporter.
• Infrastructure Development: The policy recognized the interdependence between a robust digital infrastructure and the growth of the e-commerce sector. To this end, it proposes to accord ‘infrastructure status[4]‘ to critical components such as data centers, server farms, and communication networks, ensuring seamless connectivity across the nation.
• E-commerce Marketplaces: Acknowledging the vital role of e-commerce marketplaces, the policy proposed the prohibition of Foreign Direct Investment (FDI) in inventory-based models while allowing FDI in marketplace models. This move aims to level the playing field and prevent unfair competition practices[5].
• Export Promotion through E-commerce: E-commerce offered unprecedented opportunities for export promotion. By minimizing marketing costs and transcending geographical barriers, e-commerce platforms empower domestic businesses to access global markets. However, administrative compliances and high costs have hindered the competitiveness of Indian entities in international markets. The policy’s emphasis on export promotion through e-commerce and integration with logistics plans aimed to address these challenges and bolster India’s position in the global export landscape.

At its core, the 2019 draft National E-commerce Policy sought to achieve holistic growth in the e-commerce sector while aligning with existing national policies like Make in India, Startup India, Skill India, and Digital India. By establishing a robust governance framework, the policy aimed to unlock productivity, create new-age employment opportunities, and protect sensitive personal information. This inclusive approach aimed at not only fostering economic growth but also addressed public policy imperatives.

Internationally, India’s National E-commerce Policy stood out as a pioneering effort. With its all-encompassing approach, covering dimensions such as data management, consumer protection, intellectual property, and competition, India is on the path to become a global leader in advanced e-commerce legislation. Notably, countries like China and the United States have already embraced similar policies, showcasing the international significance of India’s endeavour.

Addressing Regulatory Aspects: A Balancing Act

As with any complex policy, challenges and concerns have emerged. The draft policy, while aiming to address multifaceted issues, has been criticized for its ambiguity and lack of clarity in certain areas. Questions arise about whether the policy leans more towards being an internet policy rather than a focused e-commerce policy. Ambiguities in defining e-commerce and addressing data ownership, consumer protection, platform liabilities, and regulatory implementation need to be carefully addressed.

The upcoming National E-commerce Policy aims to strike a balance[6] between fostering innovation and protecting consumer interests. It introduces a mix of regulatory and protectionist measures to address the challenges posed by the digital economy. A pivotal concern is data governance and privacy, with the policy advocating for data localization to ensure that Indian businesses and citizens benefit from the monetization of data. The existing legislative framework, including the Information Technology Act, the Competition Act, and the Consumer Protection Act, needs to adapt to the evolving landscape of e-commerce. This involves considerations for emerging technologies, modes of delivery, data treatment, and online marketplaces.

A Vision for the Future: Recommendations

Though, the upcoming National E-Commerce Policy is yet to be made public, in our opinion, the upcoming policy will represent a significant stride forward, if it will confront certain challenges and uncertainties. The definition of e-commerce, data governance, consumer protection, intermediary responsibilities, and advertising pricing require further clarity. Regulatory alignment, stakeholder collaboration, and effective enforcement mechanisms are pivotal to the policy’s success. To refine and enhance the policy’s effectiveness, the following broad recommendations are proposed:

• Defining E-commerce: The policy should provide a unified definition of e-commerce and differentiate it from the broader digital economy, aligning with international norms.
• Data Governance: Clarify data definitions and address data ownership and localization concerns to foster international collaboration. Reevaluate data localization requirements, balancing domestic needs with international data flows.
• Consumer Protection: Introduce stringent penalties for consumer protection violations, bolstering consumer confidence in e-commerce platforms.
• Intermediary Role: Clearly outline the responsibilities of intermediaries and e-commerce platforms, ensuring a balanced ecosystem.
• Advertising Practices: Approach advertising pricing controls cautiously, considering market dynamics and fostering innovation.

Conclusion: Pioneering a Digital Future

India’s upcoming National E-commerce Policy holds the promise of transforming the nation’s digital landscape. By addressing regulatory challenges, safeguarding consumer interests, and fostering innovation, the policy aims to create an environment conducive to economic growth and global competitiveness. While challenges persist, the policy’s visionary approach, international relevance, and strategic recommendations position India as a leader in the global e-commerce arena. As the policy evolves, refining its provisions, ensuring clarity, and fostering collaboration among stakeholders will be essential. The journey ahead promises to reshape India’s digital future, asserting its role as a trailblazer in the global e-commerce landscape, while setting new standards for other nations to follow.

Shantam Sharma, Assesment Intern at S.S. Rana & Co. has assisted in the research of this Article.

[1] Available at: https://www.business-standard.com/industry/news/india-s-mass-consumers-to-lead-300-bn-e-com-opportunity-by-2030-redseer-123072600501_1.html

[2] Available at:https://www.epw.in/journal/2022/38/special-articles/national-e-commerce-policy-2019.html#:~:text=The%20draft%20national%20e%2Dcommerce,competitive%20advantage%20for%20the%20platforms.

[3] Available at: https://timesofindia.indiatimes.com/business/india-business/national-e-commerce-policy-in-final-stages-official/articleshow/102870109.cms?from=mdr

[4] Infrastructure status gives industries access to cheaper foreign currency funding through the external commercial borrowing route. Falling under infrastructure category helps the sector get credit at competitive rates and on long-term basis with enhanced limits.

[5] Available at: https://www.business-standard.com/industry/news/india-s-mass-consumers-to-lead-300-bn-e-com-opportunity-by-2030-redseer-123072600501_1.html

[6] Available at: https://timesofindia.indiatimes.com/blogs/voices/governments-balanced-regulatory-approach-to-e-commerce-spurs-economic-growth/

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