September 30, 2019 4 min read

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Growing penetration of the internet has resulted in the boom of e-commerce sector. According to a 2019 report titled ‘Unravelling the Indian consumer’ by Deloitte India and Retailers Association of India (RAI), the retail market in India is expected to grow from $795 billion in 2017 to $1.2 trillion by 2021. This will also be driven by the growth of the e-commerce market from $24 billion in 2017 to $84 billion in 2021.

The report also states that a number of international retailers are also operating in the country due to increased internet connectivity. “Further, as the internet penetration in the country increases and more international retailers start operating in India, the share of the organized retail market is expected to increase from 12 per cent in 2017 to 22-25 per cent by 202,” the report noted.

At a time when the e-commerce is expected to grow at a fast pace, DPIIT is looking to regulate and streamline the space and thus released the draft National E-commerce Policy to curb deep discounting and predatory pricing and is currently finalising the guidelines which are expected to be released in 2020.The Ministry of Consumer Affairs, Food & Public Distribution also released E-Commerce Guidelines for Consumer Protection 2019 to protect the rights of online customers. According to the statement, the guidelines apply to B2C e-commerce including goods and services and also digital content products.

According to a report by The Economic Times, the scope of the guidelines will also be expanded for including video streaming, online ticket booking and ride-hailing. According to a survey by LocalCircles, services such as e-pharmacy services, e-grocery services, food delivery services, payment services, travel/ticket services, accommodation services, taxi services, vehicle pooling services, airline & train ticketing services, e-rental services, peer-to-peer buying selling services among many others should be brought under the definition of e-commerce.

What Does The E-commerce Policy Say?

The draft policy which focuses on data, proposed regulation of cross border data flows and enabling the sharing of anonymised community data. It also suggests the e-commerce companies to set up data storage in India to store the data of Indian users. It prohibits storing of user data with third-party entities even with consumer consent. The FDI in e-commerce policy also bars a vendor to sell its products on a marketplace where it owns an equity stake. According to the draft, the Indian e-commerce space is majorly driven by data. Therefore, it is important to have a defined regulatory framework for empowering domestic entrepreneurs, leveraging access to data, connecting MSMEs, vendors, traders, etc.

However, the policy continues to be shrouded with confusion and received a mixed reaction from the stakeholders. According to various media reports, the Internet and Mobile Association of India (IAMAI) is of the view that the draft policy may severely bring down FDI flows in the sector which is the backbone to building a trillion-dollar digital economy.

The Confusion

The current e-commerce policy and guidelines can be considered as extremely complicated and are also confusing. LocalCircles founder Sachin Taparia explained the importance of having a home to a policy, as in a ministry which will head the policy.

According to an Economic Times report, several ministries are working to come up with their own set of e-commerce policies. Citing Satish Meena, senior forecast analyst at Forrester Research, the report said that the e-commerce space is difficult to regulate as it covers multiple domains such as IT, retail, payments and consumers. Thus the government may divide the policy into multiple parts rather than setting up a consolidated policy. However, in this case, the major issue is that the companies do not know who to engage with on this matter.