Missing the big picture

Draft e-commerce policy goes overboard on data protection

The new draft e-commerce policy, issued on Saturday, is focused more on privacy of data and promoting Indian businesses than on enabling the growth of an industry that has caught the imagination of an entire generation and more. But the over-emphasis on India’s right to own Indian data and restricting its free flow may take away from the primary objective of having a vision statement for e-commerce. Pegged at around $40 billion, e-commerce, excluding travel and tourism, is projected to grow to $200 billion by 2026 in the country. With e-commerce holding a single-digit market share in the $860-billion retail pie, the room for growth is significant. The government, therefore, should fully engage with the stakeholders to understand the needs and challenges of the e-commerce sector rather than finalising a policy document based on limited goals in a hurry. There’s no doubt that protection and privacy of data are important areas for policymakers. But, as pointed out in the draft, a comprehensive framework — Data Protection Bill — is already underway.

 
Besides data, which is often referred to as the new oil, the draft looks at infrastructure development, e-commerce marketplaces, regulatory issues, stimulating domestic digital economy and export promotion through e-commerce. Since e-commerce foreign investment norms were updated recently, triggering structural changes in online retail firms, this draft policy has reiterated some of the points especially related to a level-playing field between global and Indian companies. The government has the responsibility to ensure that India’s development aspirations are met, while preventing market failures and distortions, it states. Mentioning that just a handful of companies have managed to dominate the digital economy, the e-commerce draft policy makes a case for giving indigenous offers such as Aadhaar and BHIM their due. The draft is sprinkled with references to Make in India and Digital India — signature schemes of this government.

 
While the intentions of job creation, data protection and helping Indian businesses grow are not at fault, the government must recognise the need for an over-arching policy to guide the retail universe, including physical and online commerce, single brand and multi brand, B2C and B2B, Indian and foreign businesses. Isolation of e-commerce as a data-centric digital business is like missing the big picture. The draft, which has been in the making for long, has come up just ahead of the Lok Sabha elections, putting a question mark on whether a policy can be framed in time.
 

Admitting that there’s no legal framework for the government to restrict cross-border flows of data, the draft argues without having a huge trove of data generated within India, the possibility of domestic businesses creating high-value digital products would be almost nil. It’s also driving home the point that it’s vital to retain control of data to ensure job creation. And, just like oil cannot flow freely, data should be monetised for the benefit of India and its citizens. Making India office and local representatives mandatory, the new rulebook would make it tough for several international companies including those from China to continue with their e-commerce business in the country. The gifting route that many Chinese companies have adopted will be stopped. The policy may also end up penalising big service providers like Facebook and Google, making them less inclined to launch new products in India. Besides, some of the suggestions to control trans-national data flows may look good on paper, but are impractical.