New Delhi, India – According to people acquainted with the situation, the US is concerned about India’s upcoming e-commerce policy, describing it as restricted, imprecise, and open-ended. The programme, which is expected to be announced following stakeholder surveys, has left American investors and corporations in the dark, with only seven important themes discussed during a presentation on August 2. These reservations may spark conversations between the two countries over the policy’s possible impact on foreign investment and corporate operations.
The following are the seven key components of the proposed policy that were presented to stakeholders:
1. Aligning e-commerce policies with consumer protection regulations.
2. Drawing a clear line between the marketplace model (which allows foreign investment) and the inventory model (which forbids foreign direct investment).
3. Encouraging inclusive growth of micro, small, and medium-sized enterprises (MSMEs).
4. Promoting exports via e-commerce.
5. Ensuring tighter adherence to regulatory requirements.
6. Enabling customers to make free and informed decisions.
7. Determining e-commerce entities’ duties.
While these points provide a high-level summary of the anticipated legislation, American investors and businesses are concerned about the intricacies and potential ramifications for their operations.
The Confederation of All India Traders (CAIT), which represents over 80 million domestic kirana (small food) retailers, backed the government’s attempts to boost e-commerce in India. “The government’s presentation focused on the fundamental principles of the proposed policy and was sufficiently clear for all stakeholders,” said CAIT Secretary General Praveen Khandelwal, who attended the August 2 meeting. A policy to boost e-commerce in India and protect millions of domestic kirana retailers is desperately needed.”
The proposed e-commerce strategy has been under consideration since July 2019, with small Indian merchants expressing worries over giant enterprises with foreign investment functioning as inventory-based models, sometimes offering steep discounts that undermine local businesses’ competitiveness.On the other hand, large e-commerce companies have raised their own concerns about restrictive policies that they argue do not recognize their significant investments, economies of scale, and the benefits they bring to consumers.
Khandelwal emphasised the importance of the policy addressing predatory pricing and deep discounting by international corporations. He urged rigorous adherence to Foreign Direct Investment (FDI) laws and warned that multinational corporations should not avoid consumer protection by claiming to be intermediaries.
“The policy must ensure that multinational corporations’ reckless growth does not continue,” Khandelwal remarked.The proposed e-commerce strategy, which was first drafted in 2019, was focused on six main areas of the e-commerce ecosystem: data, infrastructure development, e-commerce marketplaces, regulatory challenges, fueling the domestic digital economy, and increasing exports through e-commerce.Pritha Jha, Partner at Pioneer Legal, expressed enthusiasm for the new e-commerce strategy, emphasising the need for it to comply with consumer protection laws and govern flash sales, which can have a negative impact on small businesses.
“The policy is long-awaited, having been developed through extensive consultations with stakeholders over an extended period,” Jha added. “It is expected to encourage the use of technology among small and medium-sized businesses, transforming technology into an enabler rather than a barrier.” Furthermore, the strategy intends to promote a more consumer-friendly online economy by diverting customers away from larger corporations that frequently operate as gatekeepers for online transactions.”
As the Indian government nears the unveiling of its e-commerce policy, American investors’ concerns and the complexities surrounding the regulation of this rapidly evolving sector highlight the need for a balanced approach that promotes economic growth while protecting the interests of all stakeholders. The dialogue between the United States and India on this matter may play a crucial role in shaping the future of e-commerce in the Indian market.
