Digital Competition Bill can derail MSME ecosystem, say small and medium businesses

The Indian SME Forum hosted a roundtable on Wednesday in New Delhi to discuss the implications of the DCB on MSMEs and startups.

The Digital Competition Bill (DCB) will thwart foreign direct investment and prevent the global competitiveness of MSMEs, an industry body representing small and medium businesses said on August 7.

The Indian SME Forum hosted a roundtable on Wednesday in New Delhi to discuss the implications of the DCB on MSMEs and startups.

The draft of the DCB was released in February with the wide aim of addressing Big Tech's anti-competitive practices. However, the bill has received widespread criticism from stakeholders including Indian businesses, and startups, who have maintained that the bill would impact Indian businesses detrimentally.

During the roundtable, Vinod Kumar, president, India SME Forum (ISF), said, “With large companies moving out of China, India is blessed with a great opportunity to gain from the exodus. Any regulation like DCB will act as a stumbling block in the country’s efforts to attract FDI, and promote global competitiveness of MSMEs."

Kumar pointed out that MSMEs were concerned about the proposed ex-ante regulations (ex-ante refers to measures that are brought in, in anticipation of certain impact), especially those related to usage of personal data.

"The bill appears to be similar to international regulations. The Indian ecosystem is vastly different from that of developed economies, and reliance on international models could be detrimental to the country's MSMEs," Kumar added.

The India SME Forum further said that the Bill’s intent is to regulate and provide a level playing field however it is being used as a measure to solve commercial disputes between private parties. "This can derail the vibrant MSME ecosystem in India," the body said in a statement.

Attendees of the roundtable included food startup Blue Pine Foods, R&D engineering startup DSI Robotics, HR outsourcing company ElenchusHR Solutions and so on.

Aditi Madan, founder, Blue Pine Foods said the policy priorities, particularly in the digital market economy, needs to ensure that SMEs have access to relevant information. "The focus should be on directly engaging with SMEs during policy creation to ensure their needs and perspectives are adequately addressed. "

Debashish Das, CEO of ElenchusHR Solutions said overly "stringent regulations could adversely impact" businesses by forcing them back to manual processes "reminiscent of the 70s and 80s".

Amit Agrawal, founder, DSI Robotics, expressed similar concerns on the Bill. " The Digital Competition Bill is somewhat of a safety paradox and can result in an undue compliance burden for small businesses, as has happened in the past," Agrawal said.