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India’s draft national e-commerce policy – data is the new oil.

Within a short period in the recent past, the significance of economic activities in the digital space has grown substantially, both globally and in India. This draft Document seeks to provide for consideration and discussion, a possible policy framework that will enable the country to benefit from rapid digitalization of the domestic, as well as global economy. Consumer protection, data privacy and maintenance of a level-playing field are some of the crucial issues.

Data is a valuable resource for any individual, corporation or a Government. Access to data helps in informed decision-making. Data can either be standalone individual data such as the financial details of clients available with banking institutions, or be at the level of community such as data created by recording and storing information about movement of vehicles at an intersection or data generated by climatic conditions. Data can be used for analytical, statistical, business and security purposes. The unprecedented explosion in the volume of data creates as much a threat to its misuse as it creates opportunities for utilization for policy making. Business models of companies are increasingly centered around data.

An individual consumer/user who generates data retains ownership rights over his/her data. Processing of such data by corporations without explicit consent must be dealt with sternly. Privacy concerns and data security concerns must be given due importance. Artificial Intelligence (AI) has developed self-learning capabilities, based on analysis of data, given large enough data sets for processing. An individual user might be unaware of the information created/discovered by the corporations on the basis of data generated by him/her. The National e-Commerce Policy aims to streamline protection of personal data and empower the users/consumers to have control over the data they generate and own.

With an aim to develop capacities of the domestic industry, the Policy takes forward the core components of the Digital India initiative: (i) the development of secure and stable digital infrastructure; (ii) delivering Government services digitally; and (iii) universal digital literacy. All e-Commerce websites and applications available for downloading in India must have a registered business entity in India as the importer on record or the entity through which all sales in India are transacted. e-Commerce entities are required to publicly share all relevant details of sellers who make their products available on websites/platforms of these entities.

All the sellers/retailers are required to furnish an undertaking of genuineness of products to the platforms and the same must be made accessible to consumers by the platforms. Mechanisms to enable trademark owners (and licensees) to be informed about any possible counterfeit product being sold on a platform have been included in the Policy. The platforms will be required to seek authorization from trademark owners before listing high value goods, cosmetics or goods having impact on public health on their websites. Complaint mechanism, along with requisite procedure and timeline, are prescribed. Anti-piracy measures are also required to be put in place by the platforms.

India has thus far not been a party to negotiations on e-Commerce at the multilateral level. These negotiations, under the aegis of the World Trade Organization (WTO), are intended to create binding obligations on all the WTO member countries, including India. The push for initiating negotiations on substantive obligations related to e-commerce includes elements like permanently accepting the moratorium on imposing customs duties on electronic transmissions. With increasing digitization, more and more products like books, music, films, video games, etc. are being traded electronically.

By agreeing to the permanent moratorium, countries which have tariff schedules, which allow putting duties on these kinds of products, will give up these rights and lose revenues. The tariff schedules agreed to at the WTO are in a form that developing countries have typically got higher tariffs and they have paid for these in other areas of the Uruguay Round Agreements. By making the moratorium permanent, and with more and more products now traded digitally in the era of additive manufacturing and digital printing, the GATT schedule of countries will erode and will vanish ultimately.

e-Commerce players would be required to undertake the following measures:

1) Seller details should be made available on marketplace website for all products. This shall include the full name of the seller (the name of the legal entity), address and contact details including email and phone number.

2) Sellers must provide an undertaking to the platform about genuineness of products they are selling and the same must be made accessible to consumers.

3) Trade mark (TM) owners shall be given the option to register themselves with e-commerce platforms. Whenever a trade-marked product is uploaded for sale on the platform, the platform shall notify the respective TM owner. This facility shall be put in place by platforms and made available for interested TM owners.

4) In case TM owners so desire, e-commerce platforms shall not list/ offer for sale, any of the owners’ products without prior concurrence. However, in case TM owners choose to opt for this, they would have to undertake to respond to platforms within a certain time limit.

5) In case of specified high value (luxury) goods, cosmetics or goods having impact on public health, marketplaces will be required to seek TM owner’s authorization (that is, authorized/distributor/reseller agreement) before listing the product.

6) In case a complaint is received about a product being fake/counterfeit, the same shall be conveyed within 12 hours to the owner of the TM. If the owner of a TM informs the platform about the product being sold on its platform to be counterfeit, it shall notify the seller and if the seller is unable to provide evidence that the product is genuine, it shall take down its listing and notify the TM owner of the same, as per the provisions of law.

7) The platform shall enter into an agreement with each of the sellers on its platform, under which it shall obtain guarantee of authenticity and genuineness of the products sold by the seller, and also provide for consequences of violation of the same. It shall also seek a guarantee from the sellers that the product has not been impaired in any manner and that all warranties and guarantees of the brand owner are applicable and shall be honoured accordingly. Products of any sellers who are unable to provide such a guarantee shall not be listed on the platform.

8) Though post-sale, delivery of goods to the customers and customer satisfaction will be responsibility of the seller, there is a caveat to this. Since counterfeiting is a major concern, in case a customer makes a complaint to that effect, marketplaces would have liability to return the amount paid by the customer. In addition, the marketplaces shall cease to host the counterfeited product on their platform, thereby taking down every information related to the product.

9) Marketplaces should provide for creation of financial disincentives for sellers if found to be selling counterfeit products. In addition, if a seller is found to be selling counterfeit products, the marketplace should blacklist that seller from selling on its platform for a specified period.

Anti-piracy measures

Online distribution of pirated content is a matter of serious concern. The following are strategies proposed to be put in place to tackle this.

1) Intermediaries shall put in place measures to prevent online dissemination of pirated content. Intermediaries shall identify ‘trusted entities’, whose complaints are resolved on priority. The identification of trusted entity and anti-piracy measures shall be done on a voluntary basis.

2) Upon being notified by the owner of copyright protected content/ work that a website or e-commerce platform is making available, selling or distributing the copyrighted content/ work without the prior permission/ authorization of the owner, such website or platform should expeditiously remove or disable access to the alleged content.

3) A body of industry stakeholders will be created that shall identify ‘rogue websites’. Rogue website would refer to those that host predominantly pirated content. After verification, these rogue websites shall be included in the “Infringing Websites list’. This shall invite the following:

  1. Internet service providers shall remove or disable access to the websites identified in the IWL within set time-lines.
  2. Rogue websites earn their revenues through online payments made based on a subscription or advertisement revenue models. Such payments have to be routed through Payment Gateways, which shall not permit flow of payments to or from such rogue websites.
  3. Search Engines shall take necessary steps to remove websites identified in the IWL, in their search results.
  4. Advertisers or advertising agencies shall not host any advertisements on the websites identified in the IWL.

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