Soon, a single regulator for e-commerce sector in India; what’s on cards

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Published: July 30, 2018 1:16:52 PM

In a major step towards regulation of the online space, India is mulling a single legislation to address all aspects of e-commerce regulation.

 Some of the measures suggested in the draft include local data storage, mandating the use of state-run RuPay payments in online transactions and enhancing the participation of MSME’s.

In a major step towards regulation of the online industry, India is mulling a single legislation to address all aspects of e-commerce regulation, and it is also exploring the idea of setting up a single regulator to consider all sector-related issues, according to a draft policy document seen by Reuters. The move comes amid growing demand in the space action against e-commerce players, including Amazon and Flipkart, for alleged violation of foreign direct investment (FDI) policies.

Apart from FDI violations, online sellers, most notably the AIOVA  (a community of around 2,000 online sellers) had alleged that ecommerce firms are violating existing marketplace rules of government. Acknowledging the receipt of complaints from the group, the government had said that it had received complaints to resolve issues related to payment settlement for online sellers.

According to the Reuters report, some of the measures suggested in the draft include local data storage, mandating the use of state-run RuPay payments in online transactions and enhancing the participation of micro, small and medium enterprises in online retail.

The major regulations on cards include amending thresholds so that potentially competition-distorting M&A deals get mandatorily examined. “The federal government has indicated it aims to remove the legal fragmentation governing the e-commerce sector, according to the Draft National Policy Framework on e-commerce,” the Reuters report said.

 The proposed regulator will also oversee issues like consumer protection and full disclosure by e-commerce entities on the purpose and intent of their operations, a source had recently informed the Financial Express. Recently, the $16-billion Walmart-Flipkart deal came under attack by the Confederation of All India Traders (CAIT) that represents brick-and-mortar stores. The CAIT has threatened to step up agitations, claiming “the deal is circumventing (FDI) laws”, besides helping Walmart “to reach out to offline trade through e-commerce way”.

Currently, while the DIPP formulates and notifies FDI policies, including those on e-commerce, any violation of such rules is dealt under the penal provisions of the Foreign Exchange Management Act (FEMA). This Act is administered by the Reserve Bank of India, and the ED is its enforcement authority.

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