proposed e-commerce policy that seeks to subject companies that store or mirror Indian users’ data overseas to periodic audits and set up a regulator for the sector.
An e-commerce law that restricts the information that these companies can store, use, transfer, process and analyse is also on the agenda. Various ministries had raised concerns over the role of a regulator and protection of consumer data in the policy.
“The inter-ministerial meeting will take stock of the proposed policy as it stands today and the various issues raised by other ministries,” said an official.
Industry experts say the restrictions under consideration could require both Flipkart and Amazon to significantly restructure their businesses. Following Press Note 2 of 2018, Amazon had reduced its stake in the parent companies of the two largest sellers on its platform, Cloudtail India Pvt. Ltd. and Appario Retail Pvt. Ltd., but a further tightening of norms may even force it to completely divest from the two businesses. Walmart Inc.-owned Flipkart continues to use its business-to-business entity to sell to vendors on its platform, which would need to stop if rules are tightened, said experts.
“Any major alterations to the FDI policy at this juncture will have an adverse impact on SMBs and the startup community who are all getting re-energised to tap into newer opportunities,” said an Amazon spokesperson. “We continue to remain committed to complete compliance to all applicable laws and we will continue to work with the government on enhancing our contribution to the Indian economy.”
The draft e-commerce policy, which was first discussed at various echelons of the government last year, elicited concerns such as overlap with other legislation, categories of data that require mirroring and the reach of the proposed regulator.
The ministries of electronics and IT, corporate affairs, finance and agriculture, besides the Reserve Bank of India, are among the stakeholders likely to attend the meeting. As per another official, Press Note 2, which bans entities related to an e-commerce marketplace from selling its goods on that marketplace and applied restrictions to those entities whose inventory was controlled by the marketplace, is also on the agenda.
The draft policy provides for regulation on issues such as security, law and order, law enforcement, taxation and safety of individuals to enable the government to have speedy access to data carried on ecommerce platforms that operate in the country.