Draft e-commerce policy has echoes from licence-raj era

Restrictions could drive away those planning online retail forays

A task force of the Union commerce ministry has submitted the draft National Policy on Electronic Commerce, which will now be studied by a 70-member think tank chaired by Suresh Prabhu, the Union commerce, industry and civil aviation minister. Over the coming decade, the e-commerce pie is expected to swell to $200 billion, fuelled by smartphones, cheaper data access and growing spends. The draft policy proposes the creation of a single national regulator to oversee the entire industry, although operationalising its different features would require action from multiple ministries and regulators.

Much work, however, remains to be done to forge a cohesive framework from the draft. Among the ideas in the draft policy are a sunset clause on discounts that can be offered by e-commerce firms and restrictions on sellers backed by marketplace operators. The aim may be to prevent large players from pricing out the competition though unfair practices, but taken too far such licensing and price controls can depress the sector. Foreign direct investment restrictions on players who can hold their own inventory are sought to be lifted, but there must be a majority Indian partner and all products have to be made in India. This seems like a leaf out of India’s retail FDI policy that has similar procurement diktats that are not easy to meet or monitor. The proposed e-commerce policy could drive away those planning online retail forays — and the opportunity to create jobs and benefit consumers would be lost.