Draft plan for e-commerce: Restricts predatory pricing, tax sops for data centres

After a series of discussions with industry stakeholders, the government has come out with a draft of the national e-commerce policy.

The govt, in its draft, has outlined that to gain benefit from opportunities in the digital space, the country needs to make a decision that will spur the growth of the segment. The policy key recommendation included barring group companies of e-commerce players from directly or indirectly influencing sale prices.

The bulk purchases of branded goods like mobile phones, white goods, fashion items by related party sellers which lead to price distortions in a marketplace will be not allowed.

Though to encourage micro, small and medium enterprises (MSME), the draft e-commerce policy recommends allowing them to follow inventory-based models for selling locally produced goods through an online platform. At present, e-commerce platforms are allowed only to follow marketplace model where 100 per cent FDI is allowed.

The policy mentions of building a retail platform for MSMEs through the public-private partnership (PPP) model

The draft has also recommended data localization. It has suggested a two-year sunset period for the industry to adjust before localization rules become mandatory.

Data generated by users from various sources including e-commerce platforms, social media, search engines, IoT devices etc should be stored in India. Meanwhile, the govt would have access to data stored in India for national security purpose. Tax sops will be given to promote data storage in India, according to 19-page draft policy.

Last Friday, Srikrishna panel have suggested the same in its data protection report. Telecom secretary Aruna Sundararajan also said that data of Indians should stay in India.

Taking note of widespread criticism and complaints in the Walmart-Flipkart deal, the draft policy purposes for the Competition Commission of India to consider amending its thresholds and mandatorily examine major mergers and acquisitions.

The rule goes same for foreign websites doing e-commerce transactions in India.

On Consumer protection, the policy mandates that e-commerce companies fully disclose to consumers the purpose and use of data collected and the main features of their terms and conditions in a ‘simplified and an easily understandable form’ on their websites.

It also purposes a single regulator to be set up to addressing the legal fragmentation seen across the various laws governing the e-commerce sector.

This is not the final draft policy as it will be fine-tuned before it is sent for inter-ministerial consultations.