The draft national e-commerce policy will focus on data localisation, reports Mint, citing sources. It added that the DIPP, now known as the DPIIT, may release the policy next week, but will keep it open for public consultation. Note that the release of this ecommerce policy has been a debate for the last 7 months at least.
The new draft policy was leaked in August last year. At the time, it mandated the localisation of data in India, consistent with the Srikrishna Committee’s draft data protection bill. It provided incentives like waivers on import duties and other taxes needed to set up data storage centres. It had a two-year sunset clause by which e-commerce entities would have to move personal data to India.
A month following this leak, Ramesh Abhishek and Amitabh Kant, Secretary of the erstwhile DIPP and CEO of NITI Aayog respectively, refused to comment on whether there would be a National E-Commerce Policy.
US government warns of vigilance
Meanwhile, Kenneth Juster, the US Ambassador, reportedly said that the US and Indian governments did not discuss data localisation, ecommerce legislation and the generalised system of preferences in their present meeting. The report also cited Thomas Vajda, the Acting Principal Deputy Assistant Secretary of the US, as saying that it would be in India’s interest to talk to all stakeholders and think about the impact on the overall business development before implementing both the FDI in and the ecommerce policy. Last month, the United States government voiced its concerns about the new FDI in ecommerce policy and pressed to make it a bilateral trade issue between the two countries.
Announced in late December 2018, the new FDI in Ecommerce policy disallows e-commerce players to control inventory of the vendors. As such, vendors which are owned and controlled by the e-commerce company cannot trade on the marketplace.
Amazon CFO: Indian FDI in ecommerce regulations are not user or seller friendly
In a conference call with traders and analysts, Amazon’s CFO Brian Olsavsky said that there was uncertainty over what would change in the ecommerce sector with the new FDI policy. He added that its concern was minimising the impact on its customers and sellers, but that the policy didn’t help with price selection and convenience for both sellers and users. Olsavsky added, “The new regulations… need to make sure they don’t have unintended consequences. And again, I don’t think it’s necessarily consistent with better price, better selection and better convenience for the Indian customer.”
Amazon India has seen the first hand effect of this policy:
- Amazon owned sellers and brands like Cloudtail, Appario and Solimo, Amazon Basics had to take their products offline from 1 February, in order to be compliant with the new regulation.
- However, according to one report, Amazon Basics is back to being sold on Amazon under Cloudtail. To do this, Amazon had to reportedly change the ownership structure of Cloudtail such that Amazon was no longer the owning company.
- Over a dozen small sellers exited or suspended their Amazon accounts since they were unable to manage deliveries and logistics on their own, after the policy.
- Earlier this month, Amazon India’s Pantry service, which was suspended on 1 February, started resuming the service. (Read about the timeline of FDI in ecommerce in India here.)