India outlines new commerce rules; protects domestic companies and makes it tougher for Amazon and Walmart to carry business

New e-commerce regulations have been outlined by India that will concentrate on enhancing privacy safeguards, tracking of data and is against the sale of false products.

The new policy has been outlined by the Indian government to control the growing e-commerce sector. New e-commerce draft will support the domestic firms and makes it more difficult for foreign companies in India to function by imposing few restrictions on them.

It looks like India is trying to follow the Chinese workflow; China has enabled its domestic e-commerce companies like Alibaba, Baidu, and Tencent to become tech giants of the world by promoting them successfully. Beijing has also imposed many restrictions on the operations of foreign tech companies in China, which is the second largest economy in the world.

The proposed service might help to increase the operating cost of the e-commerce sector; the news comes within two months after India changed the rules related to foreign direct investment (FDI) in the e-commerce sector.

The new proposal has affected the giant retail companies like Amazon.com and Flipkart owned by Walmart to carry out their operations in India. They will be restructuring their business operation in India over the news of the latest regulations announced by the government.

The new draft was announced on Saturday; the new draft allows for locally storing more data and enables to form more data centers and also assist the farmers within the country. This draft will not only boost the e-commerce companies to compete with each other in the country but will also help in creating more jobs which policymakers have objected in the document.

The foreign e-commerce companies have been given three years to either prepare or to construct the infrastructure they need to modify the data storage requirement that would be added to their operation cost.

The draft also mentioned that the Indian data should be used only for development purpose of the country and the Indian companies and its citizens should receive full economic gains from the data monetization process.

The draft rule further states that foreign companies have first to register themselves as a business entity in India so that they can carry out the selling operations in the country. The new draft is a 41-page record that addresses various issues such as consumer’s safety and sale of fake products. Companies have been called upon to give their feedbacks over the new draft policy by March 9.

There is a huge move by the South Asian nations to localize data. In 2018, India’s Central bank enabled payment providers like Visa Inc. and Mastercard to store user data locally;

Responding to the new draft, the giant companies Amazon said that, we are reading the rules of the draft and understanding them will share our thoughts with the government during the public review period.

Meanwhile, Flipkart did not reply to the email request for feedbacks.

E-commerce sector in India is not yet fully developed, is just at the beginning stage, in comparison to the retail sector, the market is estimated to reach 200 billion dollars by 2026 from $39 billion in 2017, and this could be mainly because of an increase in revenue and internet users, data according to India Brand Equity Foundation.

Amazon.com in India has nearly invested $5 billion in the e-commerce market and $16 billion investment from Walmart in its Indian player Flipkart. After the imposition of rules on foreign direct investment in December, Amazon and Flipkart owned by Walmart will redevelop their business activities to follow the guidelines.

India is one of the fastest growing online markets in the world. There are millions of people who are using internet for the first time in India, mostly via smartphones thus several global tech companies are focusing on the Indian e-commerce market to gain new users and to offer services. They are also focusing on collecting the demographic data on user’s online behavior and their expenditures.

Policymakers say that there are only a few companies who make use of first mover’s advantage and who dominates the digital world as of today especially in a data-driven society.

India itself will close the doors for creating standardized digital projects in the country because no restrictions have been imposed on data flow operations, draft mentioned.

Meanwhile the managing director and the chairman of local conglomerate Reliance Industries and also the richest person of the country, Mukesh Ambani has spoken and supported storing data locally and is against placing the data in the hands of foreigners.

The proposed draft intends for a technological and legal framework that will offer a foundation for limiting the exchange of data between other countries, mostly the data that has been generated in India. Even if the data is stored outside India, the Indian officials can request to access the data, and the draft gives permission to do so to the officials. New Delhi can possibly reject other government from accessing the data.

In January 2019, the secretary of Telecommunication Department spoke to start-ups in a meeting held behind the closed doors that, the government will be launching “national champion” policy that will focus on promoting the domestic companies and their success and the policy will be launched soon, reports according to Wall Street Journal.

There are limitations imposed by the Indian government on some popular tech giant companies like Facebook for their operations in the country just ahead of the parliamentary election which is scheduled to take place in April-May 2019.