With a large youth demographic, booming digital literacy, and a whopping mouser ‘sser base, India, with its current population of 1.37 billion people, has witnessed an infant-sized industry evolve into a gigantic 25 billion dollars’ worth in less than a generation’s timeline. Wait! It gets better—the e-commerce industry is expected to grow to $200 billion over the next 10 years.
The booming e-commerce growth has given businesses financial wings by offering them a virtual space for selling products online. The augmentation of e-commerce selling channels has not only created more avenues for revenue but has also given birth to newer, skilled, and semi-skilled job opportunities. The modern-day consumer has been spoilt equally for choice and convenience. With so many groups affected by the introduction of electronic commerce in India, the need for clearly laid-down rules, apart from the existing norms and regulations, to cover all online retailers was felt.
1) 49% FDI proposed under inventory model-based e-commerce companies
The policy recommends that e-tailers sell 100% Made in India products. While this aspect of the policy definitely favors a protectionist, nationalist agenda to promote the government’s” e in India” campaign, if implemented, it may strike a big blow to the foreign players. They have been anticipating the government allowing a hybrid model of their own inventory + third-party items. They may definitely not be comfortable with their inventory flow control remaining, overall, with Indian companies.
An e-commerce platform, in which foreign investment has been made, therefore, cannot exercise ownership or control over the inventory sold on its platform. But this is as of now! Who knows, things may change once the draft policy is replaced by the national e-commerce policy in the future.
2) Cap on Everlasting Discounts :
The never-ending “L” “s” ore sales and discounts being offered by giant online players over the last few years have dramatically impacted the footfall at physical retail stores. The policy recommends time and amount caps to online big e-tailers. All e-commerce sites/apps available for download in India must have a registered business entity on record as the importer or as the entity through which all sales in India are transacted.
3) Users stay within the Indian border.
The government seems to be making headway in the same direction as effectuated by the European Union’s General Data Protection Regulation Law in 2018 by mandating online platforms to store their data locally. The government is proposing to set up a legal and technological framework for restrictions on cross-border data flow and also lays out conditions for businesses regarding the collection or processing of sensitive data locally and storing it abroad. This move comes in the wake of ensuring data privacy and security compliance. Also, the policy recommends that this data be made available to the government under exceptional circumstances.
4) The Competition Commission of India’s significant role:
The recent acquisition of Flipkart by major US retailer Walmart has prompted the Competition Commission of India (CCI) to undertake greater regulatory scrutiny and closely monitor e-commerce mergers and acquisitions.
The introduction of a national e-commerce policy is focused on promoting local businesses, increasing local employment, and ensuring that our GDP and tax collection improve. In the long run, this will support the Make in India initiative. Having a regulator (Central Consumer Protection Authority (CCPA)), e-consumer courts may better address complaints about online financial frauds. It will help many MSMEs go online and large companies build a viable business rather than depend on discounts.
The draft policy indicated that MNCs in the e-commerce sector have been able to leverage their access to data to create a level playing field for Indian start-ups small The more significant the access to data, the greater the potential for Artificial Intelligence to come up with solutions based on it and the greater the likelihood of a company’s success.
Businesses find that once a certain point is reached, entry into that area’s second-mover’s barriers to entry is challenging for start-ups and small businesses.
The overall objective of the national electronic commerce policy is to prepare and enable stakeholders concerned to fully benefit from the opportunities that would arise from the progressive digitalization of the domestic and global economy. Let’s see what the future holds for India’s economy.
Keep E-Shopping and E-Tending!!
