Tug of war! Modi government in a bind over e-commerce policy

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Priyanka Sahay & Shreya Nandi Moneycontrol News

To be or not to be. The opening phrase of a soliloquy by Prince Hamlet in one of Shakespeare's famous play can best describe the current position of the government with regards to the e-commerce policy.

Barely a couple of months away from the Lok Sabha elections, the government is in a fix on whether to first launch a draft for consultation or release the e-commerce policy directly.

According to sources, while DIPP - the nodal ministry formulating the policy - wants to directly release the policy, other ministries involved are pushing for a draft policy and a public consultation before the policy sees the light of the day.

As per sources, the draft policy has been prepared and if all goes well, it could be floated in the next few days.

However, it will be interesting to see how quickly it is implemented.

This is a Catch-22 situation for the government, which has already received a lot of flak from global e-commerce companies following the recently launched Press Note 2.

Press Note 2 which consists of revised foreign direct investment (FDI) guidelines bars marketplaces from doing business with sellers in which they have invested or hold equity. It also restricts the marketplaces who have thrived by giving discounts to customers, from directly or indirectly influencing the price of the goods sold on their platforms.

If the government comes up with a full fledged policy not many companies who have invested billions of dollars in the Indian market would like it depending upon to what extent will it impact their business.

In such a situation, if any company moves the court against the policy, it will be an embarrassing situation for the government.

On the other hand, if the government comes up with a draft policy, it will have to give the stakeholders atleast 15 days to respond. This will stretch it to the first week of March when the dates of the Lok Sabha elections are expected to be announced. Once the dates are announced, the code of conduct will be implemented with immediate effect and it will bar the government from making any policy decision.

According to sources, the much awaited e-commerce policy is likely to focus on the issue of data protection and its local storage. The idea is to boost India's position in global trade negotiations. The clarification on the model in which the e-commerce company should conduct operations in India has already been defined by Press Note 2, which was announced in December.

However, it will be interesting to see if there are any further clarification on that in the policy given that it could likely be included in the bigger umbrella.

Mid last year, the government had also set up a think-tank which comprised domestic firms and industry bodies to formulate the e-commerce policy. However, it didn't see any participation from global firms such as Amazon, Walmart and Uber.

While the government did receive a lot of representations and comments from the industry, the two major players that currently govern over 80% of the e-commerce market share - Amazon and Walmart-owned Flipkart, were missing from these meetings.