The National e-Commerce Policy would steer clear of issues around protection of personal data, and would not prescribe any norms for use of data by the thriving sector, official sources familiar with the final drafting of the policy said.
The policy would not provide for a separate e-commerce regulator either, they added.
An earlier draft of the policy that was released in 2019 had devoted considerable attention to how data collected by e-commerce companies should be allowed to be used. It had emphasised that an individual consumer who generates data retains ownership rights over his or her data. It had also said that processing of such data by corporations without explicit consent must be dealt with sternly.
These data-related sections have been dropped from the policy given that the Digital Personal Data Protection (DPDP) Act passed by Parliament in the monsoon session accords the user the power over her data while also setting clear limits on how personal data can be used. Under the Act, personal data can be stored in any geography, barring the ones that are in the restricted list. The Act brings within its ambit processing of data outside India in connection with providing goods and services within India.
So all conditions on usage of data generated by Indians while using e-commerce platforms would apply also to companies that process data outside India, the sources explained.
The earlier e-commerce policy draft had also suggested a list of conditions that an e-commerce player should be made to follow in case they store data abroad.
Among conditions listed then were the data should not be shared with third parties and foreign governments. These provisions also haven’t found mention in the final draft, the sources said.
The DPDP Act also empowers the government to restrict transfer of personal data by e-commerce companies to any other country which may be notified in due course.
“The (e-commerce) companies will have to comply with the DPDP. We are not covering the data protection part of it in our policy,” the official said.
With these changes, the policy draft will now be presented to the Prime Minister’s Office, and after a go-ahead from it, it would be announced.
Traditional retailers have suggested that the e-commerce sector be brought under a new sectoral regulator. They wanted the regulator to arbitrate and provide a level playing field to small and medium retailers. However, it is felt that other economic regulators including the Competition Commission of India would suffice to take care of the issues in the e-commerce sector.
Another pillar of the policy will be consumer protection. Updated rules for this would be issued under the Consumer Protection Act of 2019. Already, there are Consumer Protection (e-Commerce) Rules.
After the policy is approved the rules will be notified by the Department of Consumer Affairs.
The policy would seek to clearly identify different modes of e-commerce models – marketplace or inventory-based model. This would lead to greater clarity while allowing FDI in e-commerce, the official added. FDI up to 100% is allowed in the marketplace model but not in the inventory-led model. This clarity will prevent disputes between e-commerce and traditional retail. Traditional retailers have often accused big e-commerce platforms of flouting the FDI rules.
Other areas that policy would address is development of digital infrastructure, regulatory issues, stimulating digital economy and export promotion through e-commerce.
The earlier draft had talked about measures to contain 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.