Draft E-Commerce Policy: Is It The Government’s Job To Fix Prices?

Not every stakeholder is convinced as India considers a policy that may force e-commerce companies, social-media websites and search engines to store their data locally and regulate anti-competitive policies such as deep discounts during online sales.

According to the recommendations of the draft policy, a copy of which is available with BloombergQuint, such locally stored data will be available to the government for security and policy objectives subject to rules related to privacy and consent.

The policy document said that the e-commerce industry could be given “time to adjust”. It also proposes to empower Competition Commission of India to amend thresholds to examine competition-distorting mergers and acquistions in e-commerce.

“I like the idea of having a policy,” said serial entrepreneur K Ganesh, who's also the promoter of online grocer Big Basket. The clauses on deep discounting and anti-competitive strategy are a case of overreach by the government, he said. “It's not the government's job to interfere in pricing, which must be market-determined.”

Sanjay Sethi, the co-founder of the online marketplace Shopclues, concurs. “All of these (proposed changes) seem (that the government) wants to tell companies how to run businesses.”

‘Missed Opportunity'

Satish Meena, senior forecast analyst at Forrester Research, believes that the government has missed a huge opportunity to ease regulation and create a level-playing field for domestic, small- and medium-scale players to flourish.

“Protecting the founders is a good (step), Meena said, adding: “But the biggest problem with this (draft policy) is that the government is trying to bring in more and more rules instead of creating the ease of doing business.”

Watch the discussion on the draft policy here: