E-commerce has been one of the key sectors attracting investment, along with employment and new wealth generation for the past couple of years. As the new government has stepped in to take charge, below are the few key areas where the policy governing this sector needs attention.
Under the current approach, there continues to be a differentiation of treatment based on the colour of money that a company raises in the market. The national policy governs the overall sector and should be equally applicable to players in the field and not be discriminated based on foreign vs domestic capital raised especially considering a majority of these companies are homegrown. This differentiation stifles competition and innovation, which does not bode well for a blooming sector.
Another key aspect that needs to be looked into is the very definition of 'e-commerce' and 'data'. Currently, these definitions are too broad-based and all-encompassing of activities on the internet which results in unintended consequences. There is certainly a need for adequate definitions of related segments where policy intervention may be required.
Data is another important subject that has increasingly gained focus across the world. India's approach towards data privacy, ownership, protection, access, sharing, and usage needs to be viewed with a global lens rather than in silos and hence should be based on globally accepted principles. It is important that policies in this regard consider consent of the individuals and companies. Further, non-consensual access to data or undermining anonymity by deeming it as a ‘national-asset’, sets the wrong precedence. It is also crucial that accessibility, analysis and use of data should not be curtailed as they provide insights to further develop products and services that will ultimately help consumers.
Another essential factor to be taken into consideration is that e-commerce is ultimately another channel for retail and as such there should be consistency in the policy governing both online and offline players in areas like discounting, quick delivery, etc. In this area the current policy seems to put online players at a disadvantage and enforcing stricter norms which offline players can circumvent. An overlooked aspect is that both online and big offline players have similarities in function; however, they have different policies governing the same aspects due to their field of play, and this will need to be looked at more closely and ensure that there is a standard acceptable approach.
The draft policy under deliberation also attempts to regulate the ‘network effect’ created by big players in the market, and with this as the backdrop the government is attempting to bring in policy that gives them access to intellectual property. Low barriers of entry and innovations have disrupted many established firms and this policy could be seen as anti-competition at a time when more pro-competition positions need to be established.
The draft policy also requires e-commerce companies to register their entities in India. This clause is restrictive and also impacts a consumer’s ability to choose from international products. If e-commerce companies fully comply with applicable laws and import through proper channels, and domicile status is not be a factor, how would the government react with similar reciprocal requirements for exports from India?
Another key aspect to be looked into is that the policy creates duplication and contradictions to a lot of existing or proposed laws – be it on data, competition, consumer protection, RBI etc– and as such requires to be redrawn, rationalised and simplified.
In addition to the above relook, the government needs to provide stronger commitment to incubation centres, tinkering labs, accelerator programs as well as working with startups for government projects. The government also needs to provide incentives to companies exploring new technologies especially in areas of 'deep-tech' that could greatly accelerate efficiencies in the ecosystem. The Startup India fund disbursement also needs to be streamlined to provide the necessary thrust for startups to survive and thrive.
Technology is being adopted in every walk of life from agriculture to supply chain, changing consumer behaviour and disrupting industries. It is playing a pivotal role in the growth of country and the economy, which needs to be nurtured to encourage innovation. While there are dark clouds looming on the sector from a policy perspective, we hope to see clearer skies ahead.
The article has been pen down by Ankur Pahwa, Partner and National Leader – E-Commerce and Consumer Internet, EY India