India is reworking proposed e-commerce rules after a draft, which had signaled a shift toward boosting domestic startups, sparked criticism, according to people familiar with the matter, who asked not to be identified as the discussions are private. Commerce Minister Suresh Prabhu tweeted Aug. 11 that his ministry had received a \u201cfew concerns,\u201d and will reach out to stakeholders to address them. The initial document received pushback, including a proposal on foreign investment in some areas and one requiring Indian consumer data to be held locally, one of the people familiar said. The discussions may lead to an overhaul and a fresh draft will be posted in a few weeks on the ministry\u2019s website, the person said. The 19-page draft, a copy of which has been seen by Bloomberg, underscored India\u2019s intent to examine every aspect of e-commerce regulation from data localization to antitrust rules. The changes would tighten restrictions on global giants like Amazon.com Inc. and Google and may bolster local startups such as digital payments provider Paytm. The nation\u2019s interest in stricter norms for an Internet market that\u2019s been largely open for decades reflects the pitched battles being fought in segments like online retail, cloud services and digital payments. Commerce Minister @CimGOI The Ministry had received few concerns regarding the draft e-Commerce Policy following which CIM @sureshpprabhu has directed officials to conduct another round of consultation with stakeholders to address them. The Minister will personally review the draft once it is prepared. Broadly the draft had signaled \u201csome kind of protectionist thinking,\u201d said Nandan Nilekani, chairman of Asia\u2019s second-largest technology services outsourcer, Infosys Ltd. \u201cIt may stem from a feeling that Indian startups should be given a boost, something on the lines of the China model.\u201d Unlike its neighbor, India has allowed Silicon Valley giants like Facebook and Google to dominate entire segments including search, social and messaging. The draft called for creating a \u201cfair environment for domestic digital firms to find their rightful place,\u201d and \u201cleveling the playing field for foreign players and domestic startups.\u201d It proposed a single legislation to encompass all aspects of e-commerce and a single regulator to govern the industry. It also outlined measures that would make local data storage mandatory, curb discounting in online retail and allow founders to keep control of their startups even with a minority stake. Continuing the theme of boosting domestic players, it proposed allowing foreign investments up to 49 percent in companies that use the inventory model to sell locally-produced goods on online platforms. Untapped Opportunity Over half a billion Indians will come online in the a next wave of internet users and shoppers, said a new report released jointly by Bain & Co, Google and Omidyar Network this month. Data consumption on the mobile is already at par with developed markets at 8 GB per month per user. Yet, only over a third of India\u2019s current 390 million users transact online, the report said, suggesting a massive untapped opportunity. The draft had suggested strengthening regulatory vigilance for payments systems, a move that would bring more stringent oversight for the likes of Google\u2019s Tez and WhatsApp\u2019s pilot payments service. It also discusses adopting anti-competitive norms by curbing discounting by online retailers, which would impact not just Amazon but also Flipkart Online Services Pvt. Ltd., which was recently acquired by Walmart Inc. in a $16 billion deal. Click here for more on the CEO that helped deliver Indian shoppers to Walmart Some retailers are backing the move as it may help large players be more disciplined on meeting foreign investment regulations. \u201cThe lack of adherence has disadvantaged millions of genuine small online sellers, who are unable to compete as large marketplaces themselves behave like sellers by controlling inventory and influencing price,\u201d said Kunal Bahl, co-founder and chief executive of New Delhi-based Snapdeal. Global Mood One of the biggest debates will probably be over data localization, which complicates the operations of companies involved in everything from maps to search to social media, potentially impacting the likes of Apple Inc., Uber Technologies Inc. and China\u2019s Alibaba Group Holding Ltd. While the draft now looks set for changes, it still points in the direction of government thinking. \u201cWhat\u2019s happening in India is only a reflection of the global mood where after decades of globalization and trade, we are seeing tariff and non-tariff barriers emerging across the world,\u201d said Infosys\u2019s Nilekani.