Government seeks to protect Indian consumer data, promote exports through new e-commerce policy

The Department for Promotion of Industry and Internal Trade released a draft of the national e-commerce policy on Saturday, which seeks to promote e-commerce exports, curtail e-commerce imports through the gifting route and strengthen data protection of Indian users by foreign companies. It also reiterates the recent FDI policy and calls for compliance under it in both letters as well as spirit.

The policy looks to allow foreign investment in the ‘marketplace’ model alone, and not for the inventory model, as had been proposed in an earlier draft last year for marketplaces with domestic control.

It also proposes the removal of the application fee for claiming export benefits, while calling for an integrated system that connects Customs, RBI and India Post to better track imports.

The policy also calls for all e-Commerce websites and applications available for download in India to have a registered business entity in India as the importer on record or the entity through which all sales in India are transacted. It also seeks to bar payments from Indian banks and payment gateways to unauthorized and unregistered sites and apps.

This is likely to hit popular Chinese e-commerce apps such as ClubFactory and Shein.

The policy keeps in line with the government's stance on data sovereignty and seeks to bar sharing of data of Indian users stored abroad to other business entities outside India, even with the customer consent. It also states that all such data stored abroad shall not be made available to a foreign government, without the prior permission of Indian authorities, and also mandates e-commerce companies to comply with the request from Indian authorities to have access to all such data stored abroad.

In a cheer to small traders in the country, the e-commerce policy aims to promote e-commerce exports.  It proposes to increase the existing limit of Rs 25,000 to make Indian e-commerce exports attractive even for high-value shipments through courier mode.

As shipments in e-commerce exports are of low value, the preferred mode of shipment is via courier services. The extant Courier Imports and Exports (Clearance) Regulations, 1998 indicates that on the export side, these regulations shall not apply when the value of consignment is above Rs. 25,000 and involves foreign exchange transaction.

Another boon for smaller firms and start-ups attempting to enter the digital sector is that they can be given ‘infant-industry’ status. The draft cites that benefits of an ‘infant industry’ status could be accorded to such firms and start-ups and access to data could be at the centre of this approach.

The policy is also set to fight the issue of counterfeit products being sold on e-commerce platforms. It mandates that seller details should be made available on the marketplace website for all products. The platforms will also be required to seek authorization from trademark owners before listing high-value goods, cosmetics or goods having an impact on public health on their websites.

The Confederation of All India Traders welcomed the draft policy, especially for its focus on retail exports, but states that instead of the Standing Group of Secretaries on e-Commerce (SGoS) being the main channel to tackle inter-departmental issues, it should be done through a committee of stakeholders. The CAIT also said that its demand for getting domestic e-commerce players under the FDI rules is also not met.

The government has called for public feedback on the draft policy up till March 9.