Prime Minister’s Office To Take Final Call On Draft Ecommerce Policy

Amid several conflicting viewpoints on the draft ecommerce policy, the matter has now landed in the Prime Minister’s Office (PMO). This is because various ministries and departments have questioned the role of the department of commerce and also some of the provisions of the policy. The draft ecommerce policy was recently submitted by the ecommerce think tank headed by Union Commerce Minister Suresh Prabhu.

Last Saturday (August 18), the policy was discussed in the PMO in a meeting attended by officials of NITI Aayog, the finance ministry, the corporate affairs ministry, the ministry of micro, small, and medium enterprises, and the Department of Industrial Policy and Promotion (DIPP), among others.

An official familiar with the matter said that differences among the various stakeholders on the draft ecommcerce policy were discussed at the PMO meeting.

It has been widely reported that the DIPP and the consumer affairs and information technology ministry, among others, have opposed certain clauses of the proposed ecommerce policy.

As Inc42 highlighted in a recent analysis, the draft ecommerce bill makes several random proposals such as making the National Payments Corporation of India (NCPI)’s RuPay card (a domestic solution/alternate to Visa and Mastercard) mandatory for payments gateways.

It also suggests the creation of a government-aided ecommerce platform to promote micro, small and medium enterprises (MSMEs).

The department of commerce is expected to put out a fresh draft of the policy taking into account the issues raised at the PMO meeting.

At the meeting, some ministries and departments also raised the issue of the department of commerce delegating some of its tasks to other ministries.

“It was pointed out that instead of delegating work, the commerce department should have brought out the policy document itself,” the report added.

The department of commerce asked the DIPP to prepare a law on domain name registration, while the ministry of electronics and information technology (MeitY) has been asked to fast-track a national encryption policy.

Similarly, the consumer affairs ministry was tasked with setting up a central consumer protection authority for mandatory registration of all ecommerce operators which would act as the nodal agency for intra-government coordination.

The Competition Commission of India (CCI) has been asked to flesh out the sunset clause proposed in the draft bill for deep discounting and their duration.

Another problem with the draft ecommcerce bill is that while it tries to support local online commerce, it also suggests that Indian-owned and Indian-controlled online marketplaces be allowed to hold inventories as long as products are 100% domestically produced.

The draft bill says that such businesses can have up to 49% foreign direct investment (FDI), a proposal that has been opposed by many stakeholders.

Further, ecommerce marketplaces will no longer be allowed to offer deep discounts through their in-house companies listed as sellers. In fact, the draft Bill recommends a sunset clause on discounts to prevent platforms from directly or indirectly influencing the prices of goods and services.

Recently, Niti Aayog chief Amitabh Kant had said that the ecommerce policy should focus on major issues instead of minor issues like discounts.

Another highlight of the draft bill is that it seeks to give more control and power to the founders of ecommerce businesses, rather than investors.

Article 2.19 of the Bill avers that “the need to amend relevant provisions of the Companies Act so as to facilitate founders to have control over their e-commerce companies despite having a small shareholding, will be examined in the light of the experience of their utilisation by e-commerce companies.”

The $200 Bn Indian ecommerce industry has been on an upward growth trajectory and is expected to surpass even the US to become the second largest ecommerce market in the world by 2034, according to an IBEF report.

[The development was reported by ET.]