India: Draft E-Commerce Policy: The Dawn Of A New Beginning

Last Updated: 6 March 2019
Article by NovoJuris Legal

Data is the basic building block of everything we are trying do in this age of Industry 4.0. Data is a valuable resource for any individual, corporation or the Government. Data can be used for analytical, statistical, business, security purposes among various other things. Keeping 'data' central to the idea of governing the e-Commerce industry in India the Department of Industrial Policy and Promotion on February 23, 2019 published the 'Draft e-Commerce Policy' ("Draft Policy").

The overall objective of the Draft Policy is to prepare and enable stakeholders to fully benefit from the opportunities that would arise from progressive digitalization of the domestic digital economy. The Draft Policy focuses on data protection, the State's paternalistic attitude towards the use of the citizen's data and cross border transactions. The Draft Policy intends to regulate some things beyond e-commerce i.e. it proposes to regulate technologies like AI, IoT, Cloud computing and Cloud-as-a-Service etc. On a holistic level it is understood that these technologies empower e-commerce industry currently and are integral to its growth and therefore the Government intends to bring these technologies under the purview of the Draft Policy. The Draft Policy is a mix of visionary thought process, advanced technological solutions, putting in place digital infrastructure to support India's digital economy etc.

DATA

The Draft Policy resonate the idea and intent of the legislature that is formulated under the Data Protection Bill, 2018 as far as the rights over data of an individual is concerned. The collective idea of the Draft Policy is to streamline the protection of personal data and empowerment of the users/consumers with respect to the data they generate and own. Though the question to be assessed here is whether this is the real intent of the Draft Policy?

The Draft Policy recognises the rights of an individual over its data by stating that "An Individual owns the right to his data" and therefore the use of an individual's personal data shall be made only upon seeking his/her express consent. It further states that the data of a group is a collective data and therefore a collective property of that particular group; it extends this rationale to state that "Thus, the data that is generated in India belongs to Indians, as do the derivatives there from". But the Draft Policy ends up categorising data of Indians as a collective resource and therefore a "national resource".

The abovementioned intent of the Draft Policy is fair and strives to achieve greater good of the country, but at what stake? If personal data belongs to an individual then this objective appears that the State wants to interfere with the personal rights of a person. The Draft Policy clearly states that "All such data stored abroad shall not be made available to other business entities outside India, for any purpose, even with the customer's consent", what follows this point in the Draft Policy, restricts sharing of data with any third party in a foreign country even if the individual has consented to such sharing of the data.

The intent behind such restriction is that currently India lacks stringent laws regarding cross-border flow of data. If there are no strict restrictions on cross-border flow of data Indian stakeholders will merely be engaged in back end processing of data for the EU / US based ecommerce entities without having the ability to create any high-value digital products. While the Government considers data as a national resource and compares it with coal, telecom spectrums etc. it ignores the fact that the inherent nature of personal data is that it belongs to an individual and not to the State, unlike coal.

The obvious reason as to why the State is taking such a stance is to eliminate issues related to consent asymmetry. But is this paternalistic attitude warranted?

If the Government is worried about foreign countries using our national resource i.e. data to their advantage it should put in place stringent data privacy and protection laws in India taking inferences from other countries.

DATA INFRASTRUCTURE

The Draft Policy takes forward the digital India initiative and intends put in place secure and digital infrastructure and encourage the development of data –storage facilities/ infrastructure including data centres, server farms, towers, tower stations, equipment, optical wires, signal transceivers, antenna etc.

The Government will add the above mentioned infrastructure facilities in the  'Harmonized Master List'. This will enable regulation of the listed infrastructure in a more streamlined manner. Whereas the infrastructure will be put in place by various implementing agencies, while financing agencies may identify these as infrastructure that they may intend to support. This will facilitate achieving last mile connectivity across urban and rural India.

The Government by developing such data/digital infrastructure wishes to support India's fast-growing digital economy and create employment. 

EASE OF REGULATION

Given the interdisciplinary nature of e-commerce it is important for the Government to tackle various regulatory challenges. The Draft Policy suggests formulating a Standing Group of Secretaries on e-Commerce (SGoS), which shall be an important body for tackling various legal issues emerging from various statutes such and Information Technology Act, 2000 and rules thereunder, the Competition Act, 2002 and the Consumer Protection Act, 1986.

Additionally the Draft Policy states that "All e-Commerce websites and application available for downloading in India must have a registered business entity in India as the importer on record or the entity through which all sales in India are transacted".

SIGNIFICANT HIGHLIGHTS OF THE DRAFT POLICY

  • The Government intends to continue charging custom tariffs on any digital goods being traded electronically (imposing custom duties on electronic transmissions). Whereas the Government is strict on its stance of not accepting the permanent moratorium on custom tariffs for goods (including digital goods) traded electronically as proposed by the WTO.
  • The Draft Policy states that there should technological standards put in place for emerging technologies like IoT, AI etc.
  • The Draft Policy introduces a term, namely 'Infant Industry' under which small scale entities facing entry barriers to enter the market will be integrated with market keeping data as a central to this integration. This will also help strengthen platforms like 'e-lala' and 'Tribes India'.
  • The Government intends to establish technology wings in each Government department.
  • The Government intends to streamline the process of importing goods in India and harmonise the functions of various administrative bodies involved in the process of import of goods in India.
  • A body of industry stakeholders will be created that shall identify 'rogue websites'. These rogue websites will be added to 'Infringing Website List' (IWL). IWL will enable the ISPs to remove or disable these websites. It will also enable payment gateways to curtail the flow of payments to or from such rogue websites. Search engines will be able to efficiently remove such rogue websites identified in the IWL.
  • There shall be no trade mark infringement and customers at large shall not be deceived by using deceptively similar trademarks. In case an e-Commerce entity receives a complaint about a counterfeit/fake product which is manufactured with intent to deceive the customers. The e-Commerce entity shall convey such misuse of the trademark within 12 hours from receiving the complaint to the trade mark owner. Whereas in case any prohibited goods/products have been sold on any e-commerce platform the entity operating such e-Commerce platform shall delist such products within 24 hours from receiving such complaint.
  • Any non-compliant e-Commerce entity will be not be given access to operate in India.
  • All e-Commerce sites/apps available to Indian consumers shall display prices in INR and must have MRPs on all packaged products, physical products and invoices generated.
  • In the view of misuse of 'gifting' route, as an interim measure, all such parcels shall be banned, with exception of life-saving drugs.
  • Details of sellers shall be available for all the products sold online.
  • Sellers shall provide undertaking regarding genuineness of the any product sold online.
  • In case of a counterfeit product is sold to a consumer, the primary onus to resolve such an issue will be of the seller but the intermediaries shall return the money paid to them by the customer and the marketplace shall seize to host such products on their platforms.
  • The intermediaries shall curtail piracy on their platforms.
  • An integrated system that connects Customs, RBI and India Post to be developed to better track imports.
  • The Draft Policy also intends to simplify the processes involved in export of goods by doing away with redundant requirements such as the need to procure Bank Realisation Certification

Once the final e-Commerce policy is enacted what will be interesting to see is whether Government opts for ease of governance or ease of doing business.

Overall this Draft Policy is a positive step towards making India one of the most prominent digital economies in the world, especially considering the strict stance the Government has taken during the WTO negotiations by not accepting the permanent moratorium on waiving custom duties on digital goods sold through electronic transmission. The Government intends to boost the local and home grown e-Commerce business entities and to provide a level playing field for MSMEs by retaining the rights to impose tariffs on electronic transmission through e-Commerce. Certain issues regarding data/personal data of an individual still needs a deep intellectual thinking, integrated with a practical approach from the Government before implementing a sector wide policy, especially keeping in mind that at the end of the day personal data belongs to an individual and the use of such personal data shall be the decision of the respective individuals and not of the State.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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