On 23 February 2019, the Department for Promotion of Industry and Internal Trade posted the Draft National e-Commerce Policy – India’s Data for India’s Development on its website for stakeholder comment. The Executive Summary states in part:

Electronic commerce and data are emerging as key enablers and critical determinants of India’s growth and economic development. In order to enhance the capabilities and realise the potential of the electronic commerce sector, it is imperative that India develops robust administrative, regulatory and legal mechanisms.

The National e-Commerce Policy lays down strategies to address issues pertinent to the sector. Consumer protection, data privacy and maintenance of a level-playing field are some of the crucial issues. The Policy takes into account interests of all stakeholders, be they investors, manufacturers, MSMEs, traders, retailers, startups and consumers. The strategies envisages should provide a basis for unlocking productivity, generating new-age jobs, protecting critical personal information, enhancing consumer awareness and facilitating onboarding of domestic producers, manufacturers, traders and retailers.

The National e-Commerce Policy aims to create a framework for achieving holistic growth of the e-commerce sector along with existing policies of Make in India and Digital India. Inclusive growth of the sector will be important catalyst for achieving economic growth and other public policy objectives.

The e-Commerce sector is driven by technology and data. Continuously evolving technologies and volumes of data generated in a consumer-oriented country like India require an enabling regulatory framework for empowering domestic entrepreneurs, leveraging access to data, connecting MSMEs, vendors, traders, etc. to the digital ecosystem as well as empowering consumers to retain control of the data generated and owned by them.

Data is a valuable resource for any individual, corporation or a Government. Access to data helps in informed decision-making. Data can either be standalone individual data such as the financial details of clients available with banking institutions, or be at the level of community such as data created by recording and storing information about movement of vehicles at an intersection or data generated by climatic conditions. Data can be used for analytical, statistical, business and security purposes. The unprecedented explosion in the volume of data creates as much a threat to its misuse as it creates opportunities for utilization for policy making. ***

The Draft Policy has a section on export strategies as well as a section on e-Commerce Marketplaces which discusses such matters as:

  • Strategies FDI
  • Other strategies relating to e-commerce marketplaces
  • Anti-Counterfeiting
  • Anti-piracy measures
  • Authentic Ratings and Reviews
  • Consumer Oriented Customer Service
  • Prevention of Sale of Prohibited Items

With regard to imports, the Draft Policy states that the following shall be applicable to all e-commerce websites/applications:

  • All product shipments from other countries to India must be channelized through the customs route.
  • An integrated system that connects Customs, RBI and India Post to be developed to better track imports.
  • Any non-compliant e-commerce app/website will not be given access to operate in India.
  • All ecommerce sites/apps available for download in India must have a registered business entity in India as the importer on record or as the entity through which all sales in India are transacted.
  • All e-Commerce sites/apps available to Indian consumers (displaying prices in INR) must have MRPs on all packaged products, physical products and invoices.
  • In view of the misuse of the ‘gifting’ route, as an interim measure, all such parcels shall be banned, with the exception of life-saving drugs.
  • Consumer/Business Payments from Indian banks and payment gateways to unauthorized and unregistered (GST non-compliant) sites/apps shall be barred.
  • As a transparency requirement, e-commerce entities would be mandated to make a full disclosure to the consumer regarding the purpose and use of data collection upfront, in a simplified and an easily understandable form on their websites/ application interfaces.

The Draft Policy is considered protectionist by some and includes provisions that would require an entity that collects or processes any sensitive data in India and stores it abroad, to adhere to the following conditions:

a) All such data stored abroad shall not be made available to other business entities outside India, for any purpose, even with the customer consent;

b) All such data stored abroad shall not be made available to a third party, for any purpose, even if the customer consents to it;

c) All such data stored abroad shall not be made available to a foreign government, without the prior permission of Indian authorities;

d) A request from Indian authorities to have access to all such data stored abroad, shall be complied with immediately;

e) Any violation of the conditions mentioned above shall face the prescribed consequences (to be formulated by the Government).

The Draft Policy also states that the current practice of not imposing custom duties on electronic transmissions must be reviewed in the light of the changing digital economy and the increased role that additive manufacturing is expected to take. A 2017 UNCTAD report suggests that it would be mostly developing countries which would suffer loss in revenue if the temporary moratorium on custom duties on electronic transmissions is made permanent.

Comments/suggestions on the Draft Policy are invited from stakeholders with the last date for receiving comments being 29 March 2019. Comments may be sent at [email protected].