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26 May 2020, Money Control

Digital India story Covid-19 resistant

India’s e-commerce sector has shown resistance to the COVID-19 pandemic. This is a welcome outcome, and to ensure its success, strong regulatory policy in e-commerce is needed to ensure a level-playing field. This will benefit the customer and strengthen the Digital India and Make in India visions of the government. Can emerging markets look to India for a model e-commerce policy where the regulator has played a part, but not overregulated?

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There are two stories that remain COVID-19 resistant. The first is that Amazon’s shares have spiked more than 30 percent since the onset of the pandemic, and the second is that Jio platforms have attracted FDI of more than $ 10 billion in the midst of the pandemic.

This augurs well for the digital India e-commerce story, which till date has also seen mega-sized investments of $ 16 billion in the sector, of which an estimated $ 5 billion is by Walmart and Amazon.

The flood of e-commerce investments is India’s last chance to revive the MSME and agricultural sector, but urgent reforms are needed. Some of the factors attracting global players are as follows:

a) India has about 504 million active monthly internet users

b) By 2022, India will have 850 million smartphone users

c) Low data costs – global average costs of 1 GB data is about $ 5, while in India it is 26 cents

d) State-aided broadband network is rolling out in 250,000 villages

e) India’s retail market offers a $ 1 trillion opportunity

f) 90 percent of retail is controlled by about 6.6 million kirana stores, which COVID-19 has brought closer to the customer

g) For multiple reason big retail formats have not found it easy in India but finally with the Facebook-Jio deal, a hub and spoke model for retail is unfolding

It is important that the regulators safeguard against the ‘Amazonisation’ of the economy and over-dependence on a single player. They must also ensure a level playing field for all e-commerce players. This will benefit the consumer and turbo-charge the MSME sector, as well as the ‘Digital India’ and ‘Make in India’ components of the government’s vision.

To achieve this, effective steps must be taken. Some of them are:

1) The regulator must stay ahead of the curve. There is data to prove that even the billions of dollars imposed upon big tech by the European Union and the U.S. was a fraction of the profits they generated by predatory tactics. To do this requires:

    • Ongoing consultations with think tanks and academia
    • E-commerce dispute resolution becoming part of the daily routine for officers in every district
    • Capacity building by way of training and refresher courses
    • Inviting international experts to conduct training sessions
    • Sending faculty members from our training institutes in Mussoorie, Hyderabad, Nagpur and Bhopal overseas, to study public policy in e-commerce

2) The regulator will have to demolish the notion of a walled garden around platform ecosystems. Data and privacy laws must follow global best practices upholding the consumers’ interest.

3) The digital divide is another area of concern and the regulator will have to ensure equal digital access, which will be the first step towards a truly pan-India market place and equal opportunity. It will also be a step towards bridging the wealth gap. Secure but seamless payment gateways will ensure the digital divide is bridged faster.

4) E-commerce will make or break the MSME sector if the gatekeepers allow for free flow of products and do not stifle sale of smaller brands to promote their own branded products. This calls for an overhaul of the consumer courts and redress forums. The use of e-courts for consumer disputes will safeguard the smallest buyers and sellers, even in the remotest part of India.

5) Farm-to-fridge via e-commerce is an accelerator to double farm income, but the bottlenecks need to be addressed. Programmes such as Geographical Indicator (GI) tagging of goods, micro food enterprises, and agroecology will get a boost with a common market via these platforms. Given the infrastructure bottlenecks in our agriculture sector, drones are a sure-fire way of bypassing these barriers and making farm-to-fridge seamless. The director general of civil aviation must be consulted on a drone policy for e-commerce. In the current pandemic, had there been a drone policy for e-commerce, economic activity would have continued without any break.

6) Self-reliance is built on the backbone of innovation and creativity. The Intellectual Property Act of 2016 will need revisiting to protect the IPR of the artisan from Bastar, the craftsman from Moradabad, the weaver from Kancheepuram, or the Unnani or Ayurvedic practitioners that have found immunity boosters for the common cold.

In nation-states the rules are top-down and platforms are enablers to control minds and consumption patterns; while in liberal democracies the lack of control has enabled technology to dictate the agenda. Can emerging markets look at India for an e-commerce policy where the regulator has played a part, but not overregulated? The regulators should refrain from price controls and let market dynamics play out freely. That will ensure an ‘Atmanirbhar’ India.

Blaise Fernandes is Board Member, Gateway House, and President & CEO, The Indian Music Industry.

This article was originally published by Money Control.