Govt Looks To Support Indian Companies Through Draft Ecommerce Policy

 April 2018: Union minister for commerce and industry Suresh Prabhu convened the first ecommerce think tank meeting and promised to finalise the framework in six months

July 2018: Ecommerce think tank is ready with the draft policy to share with the public

Even as Indian ecommerce continues to witness intensified sales battles, acquisitions, protests, legal troubles, etc, the think tank working on the framework for a national policy on ecommerce is finally ready to submit its draft ecommerce policy today (July 30). Contrast this with the one year wait time for the draft Personal Data Protection Bill, which was tabled by the Justice B N Srikrishna Committee on Friday (July 27).

The ecommerce policy draft aims to ensure a level playing field for local businesses in digital trade in India, where deep-pocketed foreign companies are investing and contesting aggressively.

Inc42 had earlier reported that some of the aspects of the industry that will be covered in the ecommerce framework are:

• Physical and digital infrastructure
• Regulatory regime
• Taxation policy
• Data flow
• Server localisation
• Intellectual property rights protection
• FDI

Commerce and industry minister Suresh Prabhu is set to chair a meeting of the think tank on Monday (July 30). The task force, which is working on a comprehensive policy on various aspects of digital trade, is led by Prabhu and comprises industry and government representatives.

It includes officials from the ministries of finance, home affairs, corporate affairs, and electronics and information technology. Representatives from telecom, IT, and ecommerce companies such as Bharti Enterprises, Reliance Jio, TCS, Wipro, Ola, Snapdeal, MakeMyTrip, UrbanClap, Justdial, PepperFry, and Practo are also part of the think tank.

The government is likely to make public the draft ecommerce policy after the meeting.

Setting Up Of Ecommerce Task Force

The ecommerce task force, which was set up in April 2018, has since been deliberating on formulating an ecommerce policy, based on inputs received from various stakeholders.

The task force formed nine subgroups to deal with 14 core issues including competition, regulation, data privacy, taxation, and a host of technical subjects such as localisation of servers and technology transfer.

As earlier reported by Inc42, the ecommerce policy is seen as a critical step taken by the Indian government in view of the international attention the Indian ecommerce market has been attracting. On the global stage, a group of 71 WTO countries has launched extensive discussions on ecommerce; they recently met for the first time in Geneva with 13 other delegations.

Draft Ecommerce Policy To Support Indian Companies

According to a top official, the government is looking at ways to support Indian ecommerce players through the ecommerce policy, without violating its international trade agreements.

The government is considering including measures to promote Indian ecommerce companies by giving them incentives as China did, and engaging with global Internet companies to see if local companies can be given preference on websites within the country.

The discussions have also pondered upon the requirement of a nodal agency or more laws for the sector so that local companies don’t lose out to international players.

Along with this, the sources added, the idea is not to bring any restrictive or protectionist measures on ecommerce activity.

Notably, some participants of the task force said while the original purpose of the meeting was to help Indian ecommerce companies, there have been discussions on other issues as well.

Further, online travel company MakeMyTrip raised a concern saying how difficult it was for Internet companies to get listed in India, while digital payments company Paytm stressed on the need to store financial data in India and on data localisation.

On the other hand, hyperlocal startup UrbanClap and accommodation provider Oyo were concerned about expansion in global markets.

The Competition Commission of India (CCI) representatives pointed out that while WTO regulations were open, it was mandatory that if Indian players are given preference, the same should be extended to international investors on Indian soil. Discussions were also held on foreign direct investment in ecommerce.

Another official said while the government was keen to make changes that would benefit Indian companies, one has to keep in mind that this is an election year and this might delay decisions on certain contentious issues.

Ecommerce Sub-Group Suggests FDI In Inventory Model

Inc42 recently reported that government officials have proposed to create a special group to keep a check on any violation of its Foreign Direct Investment (FDI) Policy by online retail platforms.

Earlier in July, a subgroup on FDI recommended that FDI be allowed in the inventory model. At that time, the commerce ministry was of the view that a decision in this regard shouldn’t be made in haste and that the issue needs to be deliberated upon.

FDI was among the 22 issues that were discussed by senior officers of the ministries of MSME, consumer affairs, electronics and information technology, and corporate affairs, along with the department of telecommunications, department of commerce, the CCI, and the Directorate General of Foreign Trade.

The official said that the government is also working towards bringing out a consolidated FDI policy by the end of August.

Indian Ecommerce Boom

The IBEF expects the Indian ecommerce to reach $200 Bn by 2026 while the Indian government’s Economic Survey 2018 revealed that India’s ecommerce market reached $33 Bn, registering a 19.1% growth in 2016-2017.

At present, ecommerce in India is on a high with global retailing giant Walmart acquiring Flipkart amid legal hassles, taxation tangles, and protests by Indian retailers and trade bodies. While Amazon continues to place bets on India with a $5 Bn commitment, Google is also set to venture into Indian ecommerce.

With rising global interest in Indian ecommerce and an increasing number of deep-pocketed players looking to get into the market, an ecommerce policy is much required to regulate the industry. The Suresh Prabhu-led think tank is right on track to provide Indian companies with the support they need to hold their own against giants such as Amazon and Walmart.

[The development was reported by ET.]