Rethinking the draft ecommerce policy

Rashmi Guptey
22nd August 2018

Can the government come up with a policy that ensures national security, creates a level playing field for brick and mortar retail and new age e-Commerce requirements, not spook the FDI sentiment and yet regulate the e-economy?

I am glad about the proposed re-think of the draft e-commerce policy. The government has decided to drop the first draft of e-commerce policy and set up a committee of secretaries to decide on a new set of recommendations.

The Confederation of All India Traders (CAIT) is not happy with the move, but let us hope that the outcome post deliberation is a more well rounded policy that takes in to account the requirements and implications for all stakeholders.

Digital commerce is an inherent and inseparable part of most commercial transactions and therefore a lop-sided e-commerce policy notified in haste or without thinking through the impact on various stakeholders (the government due to national and data security threats, consumers, retail traders, e-commerce companies, interests, foreign investors ) would be more disastrous than beneficial.

The draft policy aimed to provide a framework that would enable the country to benefit from the rapid digitalization of the domestic, as well as the global, economy. The goal was simple- An e-commerce policy would consolidate the various norms and regulations(currently in different avatars and enforced by multiple government departments) to cover all online retailers/digitally transacting companies.

Hotly debated issues in the draft policy relate to data localisation, setting up of an ecommerce regulator, move to allow 49% foreign investment in inventory-based online retail, restrictions on deep discounts(sunset clause on discounts to prevent platforms from directly or indirectly influencing the prices of goods and services) , and preference for RuPay.

The size of digital economy in India will be approximately $ 1 Trillion[i] and by 2030, it could constitute almost 50 percent of the entire economy and therefore a goal to regulate and streamline digital transaction make sense. The question is can the government come up with a sensible policy that is able to ensure national security, create a level playing field for the the brick and mortar retail and new age e-Commerce requirements, not spook the FDI sentiment and yet regulate the e-economy! Its tough but certainly needs a re-look.

[i] Source: Draft National Policy for Electronic Commerce in India;