Govt planning national e-commerce regulator


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

  1. 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.
  2. The regulator will ensure consumer protection and compliance with foreign investment caps in e-commerce.
  3. 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.
  4. The national policy framework in this regard has been prepared by a task force headed by commerce secretary Rita Teaotia

Data Localization

  1. 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.
  2. 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.
  3. It has also suggested direct and indirect tax incentives as well as according infrastructure status to data centres to encourage domestic data storage.
  4. The move will help private sector companies comply with the norms laid down by the Srikrishna committee on data localization.

Promoting MSMEs

  1. 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.
  2. Such companies may also be allowed up to 49% foreign investment.
  3. Currently, e-commerce platforms are allowed only to follow marketplace model where 100% FDI is allowed.
  4. However, the government has so far not permitted any FDI in inventory-based models.

Curbing competition-distorting mergers

  1. 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.
  2. 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

  1. The task force has also recommended that the GST procedures for e-commerce be simplified by allowing centralized registration instead of local registration.
  2. 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.
  3. 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.
e-Commerce: The New Boom
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