• The central government has reportedly set up a panel comprising secretaries from various departments and ministries to look into the matter on issues in e-commerce.

Background:

• The group will be chaired by the secretary in the department of industrial policy and promotion (DIPP). The other members of the group include secretaries of the ministry of electronics and information technology and department of commerce. Representatives of Niti Aayog and department of economic affairs are also members of the group.
• As Commerce and Industry minister last month received few concerns regarding the draft ecommerce policy following which he directed officials to conduct another round of consultation with stakeholders to address them.

Draft E-Commerce Policy:

• Recently India’s first draft e-commerce policy was released, which effectively seeks to regulate all aspects of online retail and recommends strict restrictions, including curbs on discounts, may impact not just e-commerce companies, but also countless sellers working on those platforms.

Highlights:

• The draft presented by the Indian Govt. on e-commerce portals mentions some new regulations for the digital marketplaces, which have proved to be the main medium of online shopping. For instance, e-commerce marketplaces would be prohibited from influencing the prices of goods and services, and most probably
• To support ‘Make in India’, the draft policy limits inventory based B2C e-commerce in India for products made outside India. This means that domestically produced goods can be stored in inventory, but imported goods cannot wherein local manufacturers and farmers are given more preference.
• A separate wing within Directorate of Enforcement can be allocated for handling e-commerce complaints and issues from customers. We have already reported that e-commerce complaints have increased by 1500%.
• All active e-commerce portals in India will have to register with e-Central Consumer Protection Authority (CCPA), which will be soon established to monitor the industry.
• More control and more power to the founders of the eCommerce business, rather than the investors. As per some analysts, this has been done because most of the biggest e-commerce portals in India are funded by foreign investors.
• An Indian e-commerce portal as the one where: FDI doesn’t exceed more than 49%; the founders are Indians; the platform is controlled by an Indian management.
• On the matter of discounts, the draft policy suggests a ‘sunset period’ for every discount and offer, beyond which no e-commerce portal can be allowed to provide discounts.
• The Draft Policy suggests creating infrastructure for data centres in India and links this to a sunset provision of two years at the end of which it will be mandatory to hold all data generated by users in India within India.

Criticism:

• The recent draft policy, seems to be a major hurdle considering that it plans to crackdown on deep discounts offered by Walmart-owned Flipkart and Amazon the two biggest online e-commerce websites in India.
• The recommendations that have been floated now should have been implemented years ago – when Flipkart and Amazon were new players in the market. Updating the norms at the behest of physical retail lobbies could prove to be a major deterrent to the entire e-commerce market in India.
• There is also a view that cracking down on pricing strategies of foreign e-commerce firms can create a significant disruption in current operations.
• The government may be encouraging Indian company at the cost of upsetting foreign investors who have invested billions in the Indian e-commerce sector.
• It is not clear whether the single regulator proposed is the CCPA or a separate e-commerce regulator which the policy envisages will oversee the entire segment of “e-commerce”, including FDI, consumer protection, payment mechanisms on e-commerce platforms, etc.
• Incentivising the development of large data centres is a welcome move; but the policy rationale for storage of all Indian data in India is not clear, since storage in India does not automatically ensure security of the data.