According to a draft e-commerce policy that is soon to be made public, companies including Amazon, Flipkart, Youtube, and Facebook that store Indian users’ data and mirror it overseas will be subject to a periodic audit. These companies will have to make any data that the government wants available within 72 hours, or else they will have to pay a penalty.
The last year’s drat sought to impose a lot of controls on user information that was being stored. This year, the focus is more on the promotion of e-commerce.
The new policy has also proposed a regulator for the sector. An e-commerce law will also be put in place, which will restrict the information that firms can use, store, transfer, and process. The law also empowers the government to review, investigate, and then take action against e-commerce activities that seek to threaten the security of the country. For imports and exports, e-commerce entities will also have to specify the country of addition and the value addition that has been made in the country.
The Department for Promotion of Industry and Internal Trade (DPIIT) will soon finalize this new draft e-commerce policy, to provide regulations on issues like law and order, security, law enforcement, the safety of individuals, taxation, etc. This will allow the government to have access to data that is flowing on e-commerce platforms in the country.
While there is a consensus on the broad parameters of the policy, the final shape will be determined only after the draft is approved from all quarters.
Safeguarding data storage
Coming to data that can be stored or mirrored abroad, companies need to ensure that enough safeguards are put in place at specified locations through a comprehensive periodic audit. In consultation with the stakeholders, the government will also define the categories of e-commerce that require mirroring of data. The goal here is to prohibit the cross border flow of information that relates to defense, biological records, medical records, cartographic data, etc. without apt authorization.
The last year’s policy was not taken very positively by the public. The policy was very data-focused and imposed strict conditions on cross border information flow, the duration for which data could be stored, locating computing facilities within the country, etc.
New areas covered
The new policy aims at bringing offline sellers online. They will then be supported through digital payment enablement and computerization.
In a drastic change from the previous draft, the new draft proposes legislation that will protect all users who are under the age of 18 and are unable to enter into valid contracts with e-commerce service providers, and thus stand at risk since they cannot enforce their rights against the companies.
Payments that are made through tokens that are created by foreign entities, such as for providing live video streaming services, etc, will now be channeled only through the Liberalized Remittance Scheme (LRS), online payment gateways or prepaid wallets that are authorized by the Reserve Bank of India.
As per the new drat, individuals are not expected to pay companies to access their data. The government will also not be required to do so to access such information.
The implementation of a wider definition
As per the new draft, buying, selling, marketing, and distribution of goods, including digital products or services through an electronic medium in charge of a price is termed as e-commerce. This could be business to business, business to consumer, internet-based consumer-facing platforms, e-commerce markets, app-based commercial activities, connected device-based services, Internet of things, or a combination of two or more of these.
Even platforms that are designed for social interaction, sharing information, and offering free services are termed as e-commerce entities. This is, however, only when their revenue model involves advertisements on these portals, sales, lease, or allowing the visitors to use the information that is collected during these services.
As per the earlier draft, e-commerce was defined as the buying, selling, distribution, and marketing of goods, including digital products and services. These could be done through electronic networks, where there was an online delivery of goods and services.
In both these drafts, the government reserves the right to seek disclosure of source codes and algorithms. All firms mandatorily need to be a registered business entity in the country, either as an importer on record or as the entity through which these sales are being transacted.
The government will establish dedicated e-commerce export promotion cells, e-commerce export zones as well as a ‘one-stop-shop’ for storage, testing labs, in-house customs clearance, etc. The government will also aim at improving exports though the processing of export incentives, income tax incentives, GST, input tax credit refunds, etc.
States will also be motivated to have institutional tie-ups with various e-commerce platforms to promote exports of Indian handicrafts.