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E-commerce policy almost final, with clarity now on data localisation rules 

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The passage of the Digital Personal Data Protection (DPDP) Act in Parliament this month has expedited the finalisation of the national e-commerce policy, which seeks to establish a well-defined regulatory framework for online retail. The newly passed DPDP Act has brought clarity to cross-border data flows, which were earlier an area of contention, official sources have said.

“There will be no more drafts of the proposed e-commerce policy put up for public comment as all stakeholder consultations are over. There will be a final presentation on the e-commerce policy and the consumer protection rules made to the Commerce and Industry Minister and PMO officials.

Clarity in roles

Both the Department for Promotion of Industry and Internal Trade (DPIIT) and the Department of Consumer Affairs will have their own roles in the new e-commerce dispensation, as the former will come out with the policy and the latter will come up with the set of rules for consumer protection, the official said.

‘Level playing field’

“The new e-commerce policy, with its well-stated rules, is likely to ensure a level playing field between local players and foreign companies with deep pockets. No e-commerce player with foreign investments will be allowed to hold stakes in sellers on their platform or sell their own private labels. Provisions against flash sales are also likely,” the official said.

A draft of the e-commerce policy shared by the government in early 2019 had proposed to place several restrictions on the cross-border flow of critical data of Indian users collected by e-commerce platforms and social media sites. This had led to protests from several e-commerce majors as well as the US government, which had said that the provisions on data localisation were trade-distorting and discriminatory.

Later, it was decided by the Commerce and Industry Ministry that the provisions on data localisation would be handled by the Ministry of Electronics and Information Technology (MeitY), which was, at that time, working on the data protection bill. Traders, represented by the Confederation of All India Traders’ (CAIT), had insisted that the provision of data localisation be clearly spelled out in the e-commerce policy.

Data localisation

“On data localisation, the e-commerce companies will have to follow the law of the land, and we now have an Act in place,” the official said.

Since the rules on cross-border data flows are “relatively liberal,” with the DPDP Act allowing data flows to all countries except those on the negative list, it will help to make the new e-commerce policy more acceptable to foreign players as well.

The new e-commerce policy is likely to have a strong grievance redressal mechanism so that consumers complaints are handled more efficiently and quickly. Provisions are also expected on the government’s Open Network Digital Commerce (ONDC) initiative, which seeks to democratise e-commerce by allowing all buyers and sellers access to the digital platform.

Indian e-commerce is expected to reach $163 billion by 2026, up from $63 billion in 2022, increasing at a compound annual growth rate of 27 per cent, per some industry estimates.





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