New Draft E-Commerce Policy – Data and Development

Last Updated at: Jul 14, 2020
New Draft E-Commerce Policy - Data and Development
Amazon, Flipkart, Facebook, YouTube, and other companies that store or mirror Indian users’ data overseas will be subject to periodic audits, according to a draft e-commerce policy that will soon be made public. Ecommerce companies will have to make available any data the government seeks within 72 hours or pay a penalty, according to the draft, which ET has seen.


In June this year, the government through the Minister for Commerce and Industry, Mr Piyush Goyal communicated that the United States and other countries have sent several suggestions and comments on India’s E-Commerce Policy released earlier this year. This policy document is entitled ‘India’s Data for India’s Development’ and focuses on how businesses are to maintain and protect data. While the policy is yet to come into effect, let us take a look at some of the key provisions of this policy and why foreign businesses are flagging some issues of this policy document. 

Data – The New Oil 

Considering that the world’s boundaries are becoming blurred virtually, with consumers, businesses and governments increasingly becoming interconnected through technology, data has certainly become a valuable asset. Since electronic commerce is driven by technology and data, private companies are developing new business models to benefit from the evolving technology and capitalising on the volumes of data generated. The National e-Commerce Policy aims to streamline the protection of personal data and empower the users/consumers to have control over the data they generate and own. The policy bars sharing of sensitive data of Indian users with third party entities, even with consent. Greater mobile usage and internet penetration mean more creation of data, which can be leveraged for boosting the domestic economy. While India is still in the process of navigating a data protection policy, the current regulations stress on localization of data and the e-commerce policy reiterates that. 

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Recently, it has been reported that the Ministry of Electronics and Information Technology (MeitY) may reject the Department for Promotion of Industry and Internal Trade’s (DPIIT) idea to include e-commerce data in the proposed Personal Data Protection (PDP) Bill, as there is little clarity currently on what businesses may classify as private data that needs protection and public data which can be readily available and shared. While ambiguities exist on this front, the biggest gainers of this policy are small and medium Indian industries that can use data to their advantage, giving them access to tailoring their products and advertising accordingly. This also leaves out foreign firms who would be barred from accessing such crucial data, a move clearly aimed at protectionism of both Indian consumers and the businesses. 

No Change in FDI Rules 

India’s economic policy allows foreign investments in a single-brand retail trading model, where one company owns the investors, sales and the e-commerce platform. As the current FDI policy stands, there is no prohibition in seeking investments for the market place model for e-commerce; however, the inventory-based model continues to be heavily regulated with no scope for foreign investment in the same. This is to discourage an e-commerce platform, in which foreign investment has been made from exercising ownership or control over the inventory sold on its platform, to protect small off-line retailers. The discussions on the draft policy have clearly hinted that there will be no change in this decision of the government in the near future. 

Conduct of E-Commerce Business 

The guidelines mention methods of preventing counterfeit products from being sold, anti-piracy measures, regulation of the sale of prohibited products, transparency and non-discriminatory publishing of authentic ratings and reviews, mandatory setting up and display of consumer grievance portals. 

It also mentions that all applications available for usage within India would have to be registered in India, however, the practicality of this remains to be seen. An e-commerce court for addressing specific issues of online businesses is envisaged to be set up. 

Improving Logistics Management 

It also envisages interlinking of customs, RBI and India Post to facilitate logistical challenges in tracking movement and value of goods. The policy document highlights challenges faced by most MSME e-commerce websites in high transportation and translation costs and suggests the development of India Post, as a cost-effective and efficient goods delivery mechanism. 

Avani Mishra is a graduate in law from the National Law Institute University, Bhopal. She qualified the Company Secretary course with an All India Rank 1 and is a recipient of the President’s Gold Medal for her academic distinctions. She also holds a B.Com degree with a specialization in Corporate Affairs and Administration.