What is the issue?
- There are increased policy efforts in recent times to create a facilitative ecosystem for e-commerce.
- However, there are many challenges in their implementation, without creating a regulatory framework.
What is the emerging need?
- Indian e-commerce segment has grown from significantly over the last 5 years.
- It is being largely driven by retail, financial services, travel, recruitment and digital content.
- It can potentially reach $120-billion market size by 2022.
- Indian policy makers need to ensure that this growth is sustainable.
- It should be ensured that it does not lead to abuse of market power by firms in dominant position.
- It must also be ensured that the consumers are adequately protected.
What are the challenges?
- Consumers - Unlike an offline world, e-commerce consumers may not be able to check the products or services they purchase.
- So they may be more susceptible to frauds and face greater challenges in obtaining redress.
- Pricing - In some areas, e-commerce is throwing up business models which are completely new.
- E.g. the taxi and hotel aggregator model
- The dynamic pricing regime is purely technology-enabled.
- These have made the traditional regulatory models of tariff regulations outdated.
- Banks - In fintech, proliferation of non-bank payments have revolutionised the payments industry.
- But it threatens to reduce banks' importance by making them containers where money is stored.
- Dynamism - India is currently a globally preferred location for innovation and co-creation.
- But a ‘protectionist’ approach will only set India back from the strong position.
- As, in the age of innovation and co-creation, business models are becoming obsolete before they mature.
- Policy - These developments have heightened the competitive concerns and challenges.
- They have brought out new risks for the regulators and the government.
- The other macro challenges include access to internet in remote areas, local language content, etc.
What is the way forward?
- There is a need for a risk-based template to address these emerging challenges.
- The traditional regulations have to be reworked and reformed for the new e-commerce models.
- There must be efforts on strengthening the capacity of the Competition Commission of India where needed.
- The Centre must enable an ecosystem where start-ups and SMEs are nurtured online.
- The draft e-commerce policy has many positive recommendations for enabling SMEs.
- But many other recommendations need to be debated and aligned with existing laws.
- Government also has to focus on data centre and cloud infrastructure.
- It should also pay due attention to strengthening consumer protection.
Source: BusinessLine
