The Department for promotion of Industry and Internal Trade (DPIIT) will soon release the new draft of the e-commerce policy to the public domain, to invite feedback for the same. The proposed e-commerce policy is aimed at focussing on domestic traders, and having more scrutiny on predator-pricing, some officials have revealed. According to DPI Secretary G. Mohapatra, the e-commerce sector is emerging at a fast pace, and it's difficult to predict its future in the next few years. Since India does not have e-commerce policy yet, the department has been working in that direction, he added.

The DPI has been planning its own set of recommendations on data localisation and non-personal data, which will be independent of those laid out in the Personal Data Protection Bill 2019. despite there being broad government norms on the issue of data localisation, it remains a big concern, and therefore, there is a need for a specific, tailor-fit regulation policy for the e-commerce sector.

Pricing — a prime complaint of domestic retailers — is set to be the focus of the draft policy, with the government considering an annual review of discounts given by e-marketplaces.

The new draft of the e-commerce policy has proposed a regulator for the sector, in addition to an e-commerce law, that would restrict and keep an eye on the information that firms can store, use, transfer, process and analyse. It also gives power to the government to review, investigate and take action against any e-commerce activity that puts the country's security in threat. Clear specifications have to be mentioned by e-commerce entities, like country of origin, in case of imports, and the value addition in India, in case of exports.

As per the draft, the government, after consultation from relevant stakeholders, will define the categories of e-commerce which will require mirroring or local storage of data. It proposes to forbid cross-border flow of information related to defence, medical and biological records, cartographic data (i.e., data related to maps) and genome mapping (i.e., tracking of genetic data) without prior appropriate authorisation.

The new draft policy also aims at bringing online sellers that are currently offline, by supporting them with computerisation and digital payment facilitation.

Significant changes that the new draft brings

In a radical change from the earlier draft, the new one proposes the formation of legislation that protects underage users, i.e., users under the age of 18 years, who are fundamentally unable to enter into valid contracts with their e-commerce service providers and hence at risk as they cannot enforce their rights against such companies.

Further, under the new draft, payments made through tokens created by foreign e-commerce entities, such as those providing live video-streaming services, will have to be channelled through the Liberalized Remittance Scheme (LRS), prepaid wallets or online payment gateways that are authorised by the Reserve Bank of India.

While the previous draft had a question mark over this, the new draft states that users cannot be expected to pay private companies to access their data, and nor should the government be required to do so for accessing such data.

Wider definition of "e-commerce"

Further, under the new draft, e-commerce includes buying, selling, marketing, distribution or providing access to goods, which includes digital products or services, through any electronic network for a specific price. This can be categorised as business to consumer (B2C), business to business (B2B), eCommerce marketplaces, internet-based consumer-facing content platforms, app-based e-commerce, internet of things (IoT), connected device-based services and/or a combination of any of these.

The earlier draft had defined e-commerce as including buying, selling, marketing or distribution of goods, including digital products and services. This could be through an electronic network wherein delivery of goods, including digital products, and services may be online or through traditional banking channels of cheques, demand drafts or cash.

In both drafts, the government reserved its power to seek disclosure of source code and algorithms. It also mandates all such firms to have a registered business entity in India, either as the importer on record or as the entity through which local sales are transacted.

Export Promotion

The department recommended the government to establish dedicated e-commerce export promotion cells, e-commerce export zones and “one-stop shops” for storage (including cold storage facilities), certification, testing labs, in-house customs clearance and other such features. This would improve exports through quick processing of export incentives, goods and services tax, income-tax incentives, input tax credit refunds and duty drawbacks.

This way, States will also be encouraged to have institutional tie-ups with various e-commerce players, which would, in turn, enable exports of Indian handicrafts.