National E-Commerce Policy – Features, Advantages, Criticism

What’s in today’s article?

• Why in News?
• Background
• Major Takeaways of the Draft National E-Commerce Policy
• Advantages of the Draft E-Commerce Policy
• Criticism of the Draft E-Commerce Policy

 

Why in News?

• The proposed national e-commerce policy being formulated by the commerce and industry ministry is in the final stages and no new draft policy will be issued now for seeking views of stakeholders.

 

Background

• Electronic commerce (e-commerce) is emerging as a crucial catalyst for Indian economic growth and development.
  • As per the estimates, grocery and fashion/apparel being the key drivers, the Indian e-commerce industry would be valued at $99 billion in 2024, eventually growing to $300 billion by 2030.
• Recognizing its potential, the government is closely monitoring the evolving electronic business landscape, which requires a regulatory framework to protect buying, selling, marketing, and distribution activities.
• In 2019, a draft National E-Commerce policy was prepared and placed in public domain.
• In response to the draft Policy, comments of a number of foreign governments have been received, including the US Government flagging issues of US businesses.
• In August 2023, the Department for Promotion of Industry and Internal Trade (DPIIT) held a detailed discussion with representatives of e-commerce firms and a domestic traders' body on the proposed policy.
• A government official said that a consensus has emerged among the concerned stakeholders on the proposed policy.

 

Major Takeaways of the Draft National E-Commerce Policy

• The Ministry of Commerce and Industry released the draft National E-Commerce Policy on 23 February 2019 (DPIIT 2019).
• The aim of the policy is to enhance consumer protection, data privacy and create a level playing field.
• The 2019 draft proposed to address six broad areas of the e-commerce ecosystem –
  • Data,
  • Infrastructure development,
  • E-commerce marketplaces,
  • Regulatory issues,
  • Stimulating the domestic digital economy, and
  • Export promotion through e-commerce.
• The draft talks about –
  • Framework for restrictions on cross-border data flow;
  • Collection or processing of sensitive data locally and storing it abroad;
  • Measures to contain the sale of counterfeit products, prohibited items, and pirated content; and
  • Review of the current practice of not imposing custom duties on electronic transmissions in the light of the changing digital economy.
• Besides, it suggests provisions for promoting exports through e-commerce; and developing capacity for data storage in India.
• The policy aims for inclusive growth in the digital space and in the e-commerce sector along with Make in India and Digital India programmes.
• The government hopes to encourage competition and prevent market failures and other market distortions.

 

Advantages of the Draft E-Commerce Policy

• The strongest element is that of information provision — Firms are expected to provide clear information regarding product details, photos, returns and exchange rules, modes of payment, grievance redressal mechanisms, etc.
• A related point is to set up clear grievance redressal mechanisms including nodal officers, timeframes and processes.
• This is a positive outcome for the consumers since good/transparent information and frictionless pre- and post- purchase processing are keys to a healthy e-commerce market.
• Platforms are required to open up the details of the sellers (name, location, contact details, etc.).
• This is good since buyers can now decide to do business with sellers beyond a platform (if they wish to).
• Platforms cannot use the vast data available to them to gain unfair advantage over sellers or show differential treatment between sellers. This is an important rule that goes a long way in ensuring seller welfare.

 

Criticism of the Draft E-Commerce Policy

• The proposed rules infringe on other ministries’ mandates.
  • For instance, the ‘fallback-liability’ clause holds platforms liable for any mis-selling by third party sellers.
  • However, this runs counter to the FDI rules of the Finance Ministry — preventing platforms from explicitly managing their inventory.
• Further, it takes away the immunity granted specifically to marketplaces under the IT Act.
• Similarly, the Ministry of Corporate Affairs feels that rules related to the abuse of competitive position are unnecessary since there is already a robust Competition Commission of India that oversees such issues.
• The proposal also refrains related parties from commercial activities on platforms.
  • A related party is any entity with common shareholders of over 5 per cent or more than 10 per cent ownership.
  • While the motivation for this clause is noble, it won’t make any sense from a regulatory perspective.

 

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Q1) What is meant by Flash Sales?

A flash sale is a discount or promotion offered for a limited period of time. It allows merchants to sell a vast number of products at a large discount.

 

Q2)  Which country has the biggest e-commerce market?

The revenue ranking in the e-commerce market is led by China with 1.3 trillion U.S. dollars, while the United States is following with 856.77 billion U.S. dollars.

 

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Source: National e-commerce policy in final stages, no new draft to be issued: Official |  EPW