Is there a need for an exclusive e-commerce policy in India?

A national e-commerce policy along with a consolidated legal design might help in addressing the challenges faced by the sector.
Is there a need for an exclusive e-commerce policy in India?
Is there a need for an exclusive e-commerce policy in India?
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In March 2018, Indian Commerce Secretary Rita Teaotia announced the need for a national e-commerce policy at a workshop organized by the Federation of Indian Chambers of Commerce and Industry (Ficci) and Amazon India.

"Most important for us at this point of time as policy-makers and also as stakeholders who are at the receiving end... We do not have a national e-commerce policy, and we do not have a consolidated legal framework to deal with it. So if we look at the e-commerce...we do need a broad policy that looks at the broad elements that we will use to realize the opportunities,” she stated.

She said that a national e-commerce policy complemented by a consolidated legal design might help in addressing the challenges that are presently faced by the Indian e-commerce sector.

The need for an e-commerce policy

Teaotia maintains that though the annual growth rate of the business-to-consumer (B2C) commerce transactions in India is 34%, there is still an urgent need to map out realistic aspirations for the B2C space as the growth here has occurred at a rather slow pace.

Due to the presence of multiple policy-makers and regulators within the government -- such as IT Department, industrial policy, revenue, posts, and RBI -- the Indian Ministry of Commerce has long been trying to resolve the issue of the ownership of the B2C e-commerce space in the country. Unless all of these assets within the government are on the same page, India will not be ready to harness the real potential and opportunities that the e-commerce space has to offer.

Teaotia further added that to step out onto the global platform, India has to first ensure that domestic companies and enterprises are ready to access as well as face the challenges presented by the global market before thinking about dominating the global front.

"Of course, we want to engage, of course, we want to talk about it, but we will not commit until we are domestically ready and our companies are ready to face the global challenges,” she is quoted as saying.

According to Sanjay Bhatia, President of the Ficci-Confederation of MSMEs, e-commerce is a ‘thriving’ sector for people who are increasingly shifting towards the online domain due to the convenience it has to offer. Today, the internet is affecting almost everything around us, from research to business. With the help of the internet, businesses can seamlessly advertise, market, and sell their products and services to an extensive consumer base.

"Global e-commerce transactions in 2016 were $1.9 trillion accounting for 8.7 percent of the total retail spending worldwide,” FirstPost quotes Bhatia as saying.

He further added that by 2020, this amount is expected to exceed $4 trillion, which will make up almost 15 percent of the total retail spending.

According to the first edition of Amazon Exports Digest 2017, “Amazon's international marketplace saw a staggering rise of 5000 percent in Indian products offered globally and 310 percent growth in Indian exporters using Amazon Global Fulfilment channel.”

These figures only show how powerful e-commerce can be for both developing and developed countries. While in the short run, developing countries will be able to reap immediate benefits of this sector, the real profit will be made by developing countries in the long term as significant changes will take place with respect to employment generation and infrastructure.

E-commerce has become one of the fastest growing trade channels facilitating cross-border trade of goods and services. Advanced technological innovations such as digital payments, hyper-local logistics, and analytics-driven customer engagement are the reason behind India’s fast booming e-commerce space.

Factors to take into account while formulating an e-commerce policy

While emphasizing the need to develop a national e-commerce policy, Rita Teaotia pointed out that India’s internet penetration stands only at 33%, which is very low compared to other developed economies.

Apart from this, there are other challenges too.

The vast rural-urban divide, the incompetent and inefficient delivery infrastructure in many backward areas, the inadequate power supply, inaccessibility of the internet, are some major issues that India needs to tackle in order to successfully craft an e-commerce policy that will add to the economic welfare and development of the country. These factors, along with the foreign investment regulations (2016), have to be taken into serious consideration while formulating the national e-commerce policy for India.

The ‘Digital India’ initiative of the government has provided a great boost for e-commerce through the penetration of smartphones and increased accessibility to the internet, thanks to affordable mobile data. Despite the challenges, such initiatives along with the growing awareness about the benefits and opportunities provided by e-commerce are ensuring a promising future of the e-commerce sector in India.

Arindam Paul is one of the founders of Atomberg Technologies, a startup working towards creating unique energy efficient fans and tech-savvy products. Views expressed are the his own.

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