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Draft e-commerce policy 'inimical' to USD 1 trillion digital economy goal: IAMAI


Published on: April 8, 2019 | Updated on: April 8, 2019

Currently, FDI restrictions are limited to product e-commerce only under the Consolidated FDI Policy.

New Delhi: Industry body Internet and Mobile Association of India (IAMAI) said on Monday said the draft e-commerce policy may be "inimical" to the government's efforts of building a trillion-dollar digital economy by 2022 and is likely to "severely bring down FDI flows" in the sector.

The association was also of the view that "the process of making the policy itself was less than inclusive and open" as compared to recent national-level policies like the National Digital Communications Policy 2018.

In a statement, the IAMAI said: "it is of the view that the draft National E-commerce Policy may be inimical to the government's efforts of building a trillion-dollar digital economy by 2022".

The government had sought comments from stakeholders on the draft national e-commerce policy in areas such as data, infrastructure development, online marketplaces, regulatory challenges, stimulating domestic digital economy and export promotion through e-commerce. The last date for submission was March 29.

"By artificially curbing cross-border data flow, by mandating data localisation, by extending the definition of e-commerce to include all digital services like digital advertising and online streaming and possibly imposing FDI restrictions on all digital services, the draft policy is likely to severely bring down FDI flows in the sector which is the backbone to building a trillion-dollar digital economy," said IAMAI stated.

Currently, FDI restrictions are limited to product e-commerce only under the Consolidated FDI Policy.

Among various issues, the draft policy mainly talks about data. The draft has proposed setting up of a legal and technological framework for restrictions on cross-border data flow from specified sources such as data generated by users in India by various sources including e-commerce retail platforms and social media tools.

It has also laid out conditions for businesses regarding collection or processing of sensitive data locally and storing it abroad.

Besides, it has suggested to fix a three-year period for industry to adjust to the data storage requirement of the country with a view to developing infrastructure for promoting digital economy.

IAMAI expressed difference in opinion with the draft policy's understanding of 'data is the new oil'.

"...unlike non-renewable natural resources like oil or coal, data is non-exclusive, non-exhaustive and easily replicable. Furthermore, unlike the other natural resources, processing of data does not deplete the stock of data and only create further data," the statement said.

IAMAI also said some provisions of the draft policy contradicted the underlying principles of the draft Personal Data Protection Bill (PDP) on multiple grounds.

It added that the PDP is restricted to individual data and keeps anonymised data outside its ambit, while the e-commerce policy covers all data.

Similarly, the PDP recognises individuals as ultimate owner of their data and even the state is at best a fiduciary, while the e-commerce Bill considers state as the ultimate owner of data.

"The PDP recognises consumer's consent, while the e-commerce Bill completely negates it. The PDP allows cross-border sharing of data with limitations based on category of data, while the e-commerce bill suggests a blanket ban.

"IAMAI would like to highlight that the PDP was based on the principles of privacy as fundamental rights as laid by the Supreme Court in the Puttaswamy Judgment," the statement said.