India’s new draft of the e-commerce policy consists of steps that could help local start-ups, and also impose a government oversight on how companies handle data.

This policy is being worked upon by the Government for at least two years, all amid calls to reduce the dominance of global tech giants like Alphabet Inc.’s Google, Amazon.com Inc., and Facebook Inc.

Under the rules and provisions laid out in the 15-page draft seen by Bloomberg, there would be an appointment of an e-commerce regulator, by the Government, to ensure that the industry is competitive, along with broad access to information resources to the companies working in the industry. The new draft of the policy was prepared by the Ministry of Commerce’s Department for Promotion of Industry & Internal Trade (DPIIT).

The proposed laws would also authorize the Government to access online companies’ source codes and algorithms, which, according to the Ministry, would help secure against “digitally induced biases” by competitors. The draft also talks of determining whether e-commerce businesses have “explainable AI,” referring to the use of artificial intelligence.

With more than half a billion users and still blooming, India’s ever-expanding digital economy is witnessing pitched tussles in everything- from online retail and content streaming to messaging and digital payments. There are a few global corporations that lead in each of these segments, while local start-ups have sought help from a commiserating government, that recently also banned dozens of apps backed by Chinese technology giants.
The Ministry has also decided to offer the draft policy for comments by stakeholder, on a government website, wherein, after consultation from relevant stakeholders, will define the categories of e-commerce which will require mirroring or local storage of data. However, on the issue of where this data is stored, the draft leaves open the question of which e-commerce platforms would have to keep information locally.

The draft says that there is a tendency among some of the dominating companies to exercise control over most of the information repository.

It further states that it is in the interest of the Indian consumer and the local ecosystem that there are more service providers. The network effects present in our industries do not lead to the creation of digital monopolies misusing their dominant market position.

Further, there has been a spark of criticism against previous drafts for being heavy-handed in helping local start-ups at the expense of others. This is because the hosting of data overseas has been a sticking point in such previous drafts.
Now, e-commerce companies will also be required to make available the data they collect and intend to use, to the Government within 72 hours, which could include information that is related to national security, defence, taxation, medical and biological records, and law and order, the draft said.

Also, under the new draft policy, all e-commerce platforms would be required to furnish to consumers the details of sellers, including phone numbers, customer complaint contacts, email, as well as postal addresses. The country of origin and value of work done in India should also be specified, in the case of goods that have been imported goods.

Lastly, 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.
The rules laid down in the new draft of the e-commerce policy are going to make it tough for technological giants like Amazon, Google and others to keep consumers engaged in India. Along with the new policy, the Prime Minister's encouragement to the masses to move towards Indian-made goods and services will make it even more challenging, as there has already been a huge uprising amongst them against Chinese and other countries' manufactured products.