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Wednesday, January 27, 2021

Draft e-comm policy: Govt considers new probe body, data audits

Any such move will likely spell trouble for players like Amazon and Flipkart that are often accused by brick-and-mortar players of resorting to predatory pricing by offering discounts clandestinely through the sellers on their platforms, in violation of the FDI rules.

By: ENS Economic Bureau | New Delhi | December 9, 2020 3:00:35 am
To prevent misuse of data, the draft policy proposes safeguards that may include restricting cross-border flow of the data pertaining to Indians and the transactions taking place in the country.

The government may set up an investigation body to “holistically inquire” into the violation of various laws by e-commerce entities and initiate action, if a draft policy firmed up by the Department for Promotion of Industry and Internal trade (DPIIT) is adopted.

Any such move will likely spell trouble for players like Amazon and Flipkart that are often accused by brick-and-mortar players of resorting to predatory pricing by offering discounts clandestinely through the sellers on their platforms, in violation of the FDI rules. The e-commerce players, however, have denied the charges.

To prevent misuse of data, the draft policy proposes safeguards that may include restricting cross-border flow of the data pertaining to Indians and the transactions taking place in the country. Adequate audits may also be carried out by Indian firms of the storage locations of these entities, it suggests.

It’s not immediately clear if the government intends to allow players like Amazon and Flipkart to keep Indian users’ data abroad after subjecting their storage locations to periodic audits. “Violation of safeguards shall be viewed seriously and attract heavy penalties,” it states.

The draft policy recognises the cross-cutting nature of e-commerce and the existence of a plethora of laws and regulations. Therefore, an investigation body is required to “ensure that the speed of action (against violations) is not adversely impacted as a result of fragmented legal domain”.

The various laws that currently govern e-commerce activities include the Income Tax Act, Consumer Protection Act, IT Act, Foreign Exchange Management Act, Competition Act, Payment And Settlement Systems Act, Companies Act and laws related to the Goods and Services Tax.

The e-commerce operators must also ensure that algorithms used by them are not biased towards any particular seller or vendor. They must also ensure that goods and services delivered to the consumers match the description given on the platform and quality product and services are provided to them. —FE

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