India’s New Draft E-Commerce Policy Offers Nothing New, Says Industry
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India’s New Draft E-Commerce Policy Offers Nothing New, Says Industry

India’s third attempt at forming a draft e-commerce policy to tighten control over tech behemoths such as Amazon Inc. and Walmart-owned Flipkart in one of the world’s second-largest internet market hasn’t made striking changes from the previous framework, according to sector experts.

According to the new draft policy document reviewed by BloombergQuint:

  • There is no mention an e-commerce regulator as highlighted in last year’s draft. It only says that there will be a standing group of secretaries that will work on administrating the e-commerce policy.

  • To ensure that e-commerce is not used to defraud customers, registration with an authority identified by government has been made mandatory, with no further details.

  • In foreign investments, FDI policy will prevail in case of inconsistencies between the two polices.

The new draft is again very convoluted in practice and it’s very difficult to execute, said Arvind Singhal, chairman and managing director of Technopak. “It tries to take care of interests of everyone, but in practice it is difficult to execute, and is devoid of normal retail practices.”

According to Satish Meena, research analyst at Forrester Research, the focus seems to have further sharpened from the previous draft, but continues to be ambiguous when it comes to implementation. “Everyone wants to see the policy and you can’t keep publishing the draft every year. This is a big pain point, and with this draft it doesn’t seem it is over yet,” Meena told BloombergQuint over the phone.

K Ganesh, partner at Growth Story, said that while dropping of e-commerce regulator is a much-needed decision, several ambiguities exist in the draft. “Like first, to clearly define what e-commerce is? Would food, travel done online be part of e-commerce? Who all are a part of it? Second, how do you ensure equal treatment of sellers, among others,” he said.

It isn’t possible to have equal treatment of sellers, similar in physical retail, as sellers need to be differentiated on the basis of size, scale, quality and what they bring to the table, Ganesh said. “You cannot have democratised, socialist attitude towards sellers, and they have to be differentiated.”

Guruprasad Mohapatra, secretary in the Department for Promotion of Industry and Internal Trade, didn't answer calls to his mobile phone.

Also read: India’s Move to Deter Digital Monopolies May Hit Amazon, Walmart

Like the last draft, the broad theme this time too has been fair competition, and maintaining level-playing field to avoid digital monopolies. The third iteration of the draft rules aims to address growth and “reduce prevalent market distortions”, said the policy note, reviewed by BloombergQuint. To do this, the draft proposes to ensure algorithms created by e-retailers do not discriminate against sellers, and do not adopt algorithms which result in prioritising a specified seller.

Meena, however, said using algorithms to provide better quality products to customers is too core to any platform. “Doing away with algorithm will lead to customers getting sub-quality products.”

According to Ankur Pahwa, national leader for e-commerce and consumer internet sector, at EY, while the government is thinking in the right direction, the industry needs a consistent policy approach. Multiple elements of e-commerce be it data privacy, FDI, retail policy, needs to talk together, to avoid confusion, and should be seamless in the way they are interpreted and implemented, he said. “We do have to keep the entire free market aspect in mind while devising the policies.”

Ganesh agreed. In today’s context, there’s a lot of overlap between physical retail and e-commerce, whether it’s Reliance buying Future or Tata going digital, he said. “What we need is a comprehensive retail policy which includes everything because distinctions between physical retail and e-commerce are getting blurred. A policy that covers all channels of retails is the need of the hour.”

Other Key Highlights Of The Policy:

  • The government can collect information from e-commerce platforms to aid it making necessary decisions.

  • An e-commerce operator to ensure that information collected through platform is not used to obtain market advantage against sellers on its own platform.

  • E-commerce operators must bring out clear and transparent policies on discounts, including the basis of discount rates funded by platforms for different products/suppliers and implications of participation/non-participation in discount schemes.

  • A body of industry stakeholders and identified trusted parties (as voluntarily identified by e-commerce entities) will be created that to identify rogue e-commerce entities. Rogue e-commerce entities refer to those entities that host predominantly pirated content.

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