Draft e-commerce policy: Govt mulls new probe body, data audits

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December 9, 2020 2:45 AM

The government is in the process of developing regulations for personal and non-personal data and concerns related to privacy and national security will be handled through these regulations, it says.

The ecommerce players, however, have denied the charges.The online B2B e-commerce market could be worth over 60 billion dollars by 2025.

The government may set up an investigation body to “holistically inquire” into the violation of various laws by e-commerce entities and initiate action, if a draft policy firmed up by the Department for Promotion of Industry and Internal trade (DPIIT) is adopted.

Any such move will likely spell trouble for players like Amazon and Flipkart that are often accused by brick-and-mortar players of resorting to predatory pricing by offering discounts clandestinely via the sellers on their platforms, in violation of the FDI rules. The ecommerce players, however, have denied the charges.

To prevent misuse of data, the draft policy proposes safeguards that may include restricting cross-border flow of the data pertaining to Indians and the transactions taking place in the country. Adequate audits may also be carried out by Indian firms of the storage locations of these entities, it suggests.

It’s not immediately clear if the government intends to allow players like Amazon and Flipkart to keep Indian users’ data abroad after subjecting their storage locations to periodic audits. “Violation of safeguards shall be viewed seriously and attract heavy penalties,” it states.

The draft policy recognises the cross-cutting nature of e-commerce and the existence of a plethora of laws and regulations. Therefore, an investigation body is required to “ensure that the speed of action (against violations) is not adversely impacted as a result of fragmented legal domain”.

The various laws that currently govern e-commerce activities include the Income Tax Act, Consumer Protection Act, IT Act, Foreign Exchange Management Act, Competition Act, Payment And Settlement Systems Act, Companies Act and laws related to the GST.

The draft policy seeks to ensure a level-playing field for all e-commerce players by curbing the influence of “monopolistic tendencies”, and “maintain symmetric information to exert free choice”, also keeping in mind the loss of business for the small retail trader segment.

“The greater benefits of e-commerce can be reaped only when the field remains competitive and barriers to new entrants are minimised,” it says.

The e-commerce operators must also ensure that algorithms used by them are not biased towards any particular seller or vendor. They must also ensure that goods and services delivered to the consumers match the description given on the platform and quality product and services are provided to them. “Consumers have a right to receive full information about the product, its content, country of origin and value addition made in India,” the draft policy highlights.

The government is in the process of developing regulations for personal and non-personal data and concerns related to privacy and national security will be handled through these regulations, it says.

The Centre will lay down principles for usage of data for the purpose of development of any industry, e-commerce, consumer protection, national security, economic security and law enforcement including taxation where such principles do not already exist.

“Sharing of data for industrial development shall be encouraged and regulations for data will provide for sharing mechanism,” the draft policy adds.

It also suggests the setting up of a body of industry stakeholders and identified trusted parties (as voluntarily identified by e-commerce entities). This will identify ‘rogue ecommerce entities” that host predominantly pirated content. These rogue entities will then be subject to penal measures, including denial of access to their websites by internet service providers. “In order to ensure that e-Commerce is not used to defraud customers, registration with an authority identified by government shall be mandatory,” it says.

The draft policy also makes it clear that payments made through token/gift/voucher systems, on any e-commerce platform must go through regulated channels, such as the Liberalised Remittance Scheme, prepaid wallets or online payment gateways authorised by the RBI.

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