india

Updated: Jul 29, 2019 08:36 IST

Sensitive trade negotiations with the US have held up the finalisation of India’s e-commerce policy and data protection legislation as both proposed laws are opposed by American multinationals, officials of two ministries said.

US assistant trade representative Christopher Wilson and additional commerce secretary Sanjay Chadha held discussions in New Delhi on July 11-12, days after the leaders of the two countries met on the sidelines of the G20 Summit in Osaka, to discuss irritants in ties. The meeting, people familiar with the developments in New Delhi and Washington said, didn’t lead to much forward movement though both sides displayed a desire to work closely.

The sticking points include import tariffs and barriers, and the two proposed laws that officials now say may undergo changes to strike a balance between domestic interests and foreign investors’ concerns.

“A data protection policy is a must for a comprehensive e-commerce policy. Data are central to several American multinationals, who oppose any restrictions on data storage and processing, while the draft law prepared before the elections insisted on data localisation and access to classified data in the national interest,” one of the officials said.

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The administrative ministry for the e-commerce policy is the commerce and industry ministry while the Personal Data Protection bill of 2018 was readied by the ministry of electronics and information technology (MeitY). The draft e-commerce policy couldn’t be unveiled as the government didn’t want to alienate about 70 million domestic traders, one of the key constituencies of the ruling Bharatiya Janata Party (BJP), the officials said, adding that drafts of both policies were ready before the general elections.

On July 26, commerce minister Piyush Goyal told the Rajya Sabha: “A draft national e-commerce policy has been prepared and placed in public domain. Comments from various stakeholders (companies, industry associations, think tanks, foreign governments) have been received.” He added meetings had been held with stakeholders, e-commerce firms and associations of kirana stores and retailers to discuss matters related to e-commerce.

The draft policy addresses six broad issues of the e-commerce ecosystem – virtual marketplaces, regulatory issues, infrastructure development, data, stimulating the domestic digital economy and export promotion through e-commerce, a commerce ministry official said.

The e-commerce policy is contingent on the personal data protection policy, which will specify the nature of sensitive data that can’t be hosted on overseas servers, and protection of personal details of customers, officials said.

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Foreign secretary Vijay Gokhale recently described data as a “part of national wealth” and called for more talks with the US and other players on ways to regulate the flow of data in line with domestic requirements.

The key reasons for having a comprehensive e-commerce policy include regulating access to data, which is one of the main elements for success of an enterprise in the digital economy, protecting consumers’ interests, promoting domestic production, checking misuse of dominant position by local or global players, and providing a legal framework for online commerce, the officials said.

To protect the interests of domestic retailers, the government recently restricted foreign e-commerce marketplaces from selling products of affiliate companies and prohibited them from forging exclusive arrangements with vendors. The move was welcomed by some 70 million domestic traders and small shopkeepers, but it invited severe criticism from global investors and multinationals.

On the US side, there is a feeling that India could show more flexibility on issues that matter to the Trump administration and its America First policy. This includes some “give and take” on issues like access for medical devices such as stents and for dairy products.

“We understand the need for India to place a cap on the prices of medical devices but our companies also need to make a profit. On the issue of dairy products, we offered to have dual certification,” said one of the people familiar with developments in Washington, referring to India’s concerns about dairy products origination from cows fed animal feed.

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Both before his meeting with Prime Minister Narendra Modi on June 28 in Osaka, Japan, and the visit of the US trade officials to India, Trump criticised Indian tariffs on US products in his tweets.

The person cited above sought to play down the US president’s tweets, saying there was a strong desire on the American side to bolster trade ties and bring them in line with the robust cooperation in areas such as strategic matters, defence and counterterrorism.

However, more can be done if India addressed some of the issues that the president was “fixated” on, such as the tariffs on Harley-Davidson motorcycles, this person added.