Government publishes draft e-commerce directive, restricts data storage abroad

The draft directive said the framework would be created to provide the basis for imposing restrictions on the cross-border flow of data from certain sources, including data collected from IoT devices installed in public spaces and data collected by users in India generated from various sources including z trading platforms, social media and search engines.

The 42-page draft covers six broad themes of the e-commerce ecosystem – data, infrastructure development, e-commerce marketplaces, regulatory issues, stimulating the domestic digital economy, and e-commerce boosting exports.

“It’s almost a cliché today that data is the new oil. Unlike oil, data flows freely across borders. They can be stored or processed abroad and the processor can appropriate all the value. Therefore, India’s data should be used for the development of the country and Indian citizens and businesses should benefit economically from the monetization of data,” says the draft “National e-Commerce Policy — India’s Data for India’s Development”.

A business entity that collects or processes sensitive data in India and stores it abroad must comply with certain conditions under the draft directive.

The terms state that any such data stored overseas will not be made available to business entities outside of India for any purpose, even with the consent of the client. In addition, the data shall not be made available to any third party for any purpose without prior consent from Indian authorities, nor may it be disclosed to any foreign government, the draft said.

“An appropriate framework will be developed for sharing community data serving a broader public interest (subject to addressing privacy-related issues) with start-ups and companies. The larger public interest or public good is an evolving concept carried out by a ‘data authority’ to be established for that purpose,” she added.

The policy established strategies to protect against data misuse while preserving the spirit of existing regulations. According to the draft policy, e-commerce guarantees a cross-segment framework due to the cross-sectional nature of the issues.

Regarding e-commerce marketplace companies, the policy aims to invite and encourage foreign direct investment (FDI) “alone” into the marketplace model being carried out by companies like Flipkart and Amazon.

“An e-commerce platform that has received foreign investment cannot therefore exercise ownership or control over the inventory sold on its platform. That way, foreign investments are not seen as a threat by offline small retailers with multi-brand products,” it said.

Online marketplaces should not adopt business models or strategies that are discriminatory and favor one or a few sellers/merchants operating on their platforms over others, the draft clarifies. It contains certain steps that all eCommerce websites/applications must follow. Also, all e-commerce sites/apps available for download in India must have an Indian registered business entity as the importer or as the entity through which all sales in India are processed. “This is important to ensure compliance with laws and regulations to prevent deceptive and fraudulent practices, privacy and security,” the draft reads.

It has also proposed measures to curb the sale of counterfeit products, banned items and pirated content.

This is the second draft prepared by the Department of Industry and Interior Promotion (DPIIT). Several concerns were raised about the first draft of the trade division. Regarding the regulatory system of the sector, the governments found that the existing regulations and structures are not sufficient to deal with problems raised by the digital economy.

According to the draft, existing laws and regulations must be further developed to take account of changing business practices and business models. On tax-related issues in the industry, the draft directive states that the current practice of not levying tariffs on electronic transmissions needs to be reviewed in the light of the changing digital economy and the expected increasing role of additive manufacturing.

To promote exports through e-commerce, it was said that there was a need to incentivize and reduce the administrative burden of outbound shipments via this medium.

“The existing limit of €25,000 are to be increased in order to make Indian e-commerce exports attractive for high-value shipments by courier as well,” the draft reads.

It also emphasized the development of physical infrastructure for a resilient digital economy and suggested steps to develop data storage capacity in India. “An assessment needs to be made of how ready the available infrastructure in the country is for data storage. Creating an infrastructure for storage would take some time. A timeframe would be set for the transition to data storage within the country. It would give the industry three years to adapt to data storage requirements.”

This story was published from a wire agency feed with no changes to the text. Only the headline has been changed