Challenges to E-Commerce Regime

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• These have made the traditional regulatory models of tariff regulations outdated.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