Mains Paper 2: Governance | Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
From UPSC perspective, the following things are important:
Prelims level: Particulars of the draft
Mains level: Regulation of e-commerce in India
Draft National e-Com Regulator
- A national regulator for e-commerce provisioning mandatory data localization and tax sops for data centres is a part of an upcoming legislation governing all aspects of electronic commerce in the country.
- The regulator will ensure consumer protection and compliance with foreign investment caps in e-commerce.
- This is in response to a proposal for multilateral discipline in e-commerce at the WTO as various government departments have contradictory views on the matter.
- The national policy framework in this regard has been prepared by a task force headed by commerce secretary Rita Teaotia
- Storing user data in a data centre on the Internet that is physically situated in the same country where the data originated is called data localization.
- While the draft e-commerce policy has strongly recommended data localization, it has suggested a two-year sunset period for the industry to adjust before localization rules become mandatory.
- It has also suggested direct and indirect tax incentives as well as according infrastructure status to data centres to encourage domestic data storage.
- The move will help private sector companies comply with the norms laid down by the Srikrishna committee on data localization.
- To encourage micro, small and medium enterprises, the draft policy recommends allowing them to follow inventory-based e-commerce models for selling locally produced goods through an online platform.
- Such companies may also be allowed up to 49% foreign investment.
- Currently, e-commerce platforms are allowed only to follow marketplace model where 100% FDI is allowed.
- However, the government has so far not permitted any FDI in inventory-based models.
Curbing competition-distorting mergers
- The draft policy recommends that the Competition Commission of India consider suitably amending the thresholds so that competition-distorting mergers and acquisitions below the existing threshold also get mandatorily examined by it in case of e-commerce entities.
- For such entities, thresholds based on other variables (such as access to data) which are more relevant in this area, would be considered.
Simplified GST Procedures
- The task force has also recommended that the GST procedures for e-commerce be simplified by allowing centralized registration instead of local registration.
- The relevant GST provisions would be modified in order to create a level playing field between online and offline delivery of goods and services for the purpose of GST.
- Currently, MSMEs with revenue of less than ₹20 lakh a year are not subject to GST if they sale offline whereas they have to pay GST if they sell goods on online platforms.