Wednesday 27 June 2018

Ecommerce Task Force To Examine Data Localisation, Cross-Border Data Laws

The Indian government, which is working on finalising the ecommerce policy framework, has sought inputs from the ecommerce task forceto explore ways to prevent Indian data from being controlled or mined by entities outside the country.
It was revealed that the Ministry of Commerce posted at least 80 questions to the nine sub-groups of the task force on topics such as cross-border transfer of information by electronic means, data protection, the location of computing facilities, taxation, the contours of future technology such as artificial intelligence and blockchain, net neutrality, and foreign direct investment.
Earlier, in April, the government had constituted a task force headed by the commerce secretary to deliberate a national policy on ecommerce.
With a view to regulating the space, the government wants the policy to facilitate “continued Indian ownership of Indian startups.” It also wants to promote a level playing field and enable founders/promoters who are minority shareholders to run and have control of their companies.
“Cross-border data flows will be critical because we expect two diverse set of views on the matter, especially on localisation,” an official said.
Further, on data protection, the ministry has asked the task force to look at elements that are not being considered by the Justice Srikrishna Committee on data protection.
“The Justice Srikrishna Committee report will be part of the think-tank’s study and our recommendations would be in the same direction as theirs,” added another official.
At the same time, the government has also sought clarity on the impact of global practices on data protection such as the EU GDPR and the EU-US Privacy Shield on India’s position in future.
These issues were discussed in the meeting of the ecommerce task force subgroups last week and the discussions will extend to the next meeting on July 4.
With the national ecommerce policy, the government plans to promote investment by large Indian companies in new domestic startups as well as a single-window mechanism for clearances for all ecommerce companies. It is further studying oligopolies in operating systems, mobile apps, and the marketplace to encourage local ecommerce companies through the policy.
“We have advocated ownership of digital platforms even at multilateral fora such as UNCTAD because of the control these products have on social, political and cultural systems. We need a regime that takes cognisance of the fact,” the report added.
A member of the task force also said that India needs to look at data as a natural resource and the right to the data should be with the government by default.
The Indian ecommerce policy is being spearheaded by Union minister Suresh Prabhu, who is expected to finalise the framework within the next few months.
The IBEF expects Indian ecommerce to reach $200 Bn by 2026 while the Indian government’s Economic Survey 2018 revealed that India’s ecommerce market reached $33 Bn, registering a 19.1% growth in 2016-2017.
With global players like Walmart, Amazon, and now Google interested in the ecommerce space in India, the policy framework will be necessary to control and regulate the activities of these companies in the country.

Towards an India e-commerce policy

A broader approach to e-commerce will help establish greater policy certainty which can drive growth. Photo: iStockphoto
A broader approach to e-commerce will help establish greater policy certainty which can drive growth. Photo: iStockphoto
The ministry of commerce is undertaking several rounds of consultations on an e-commerce policy framework for India. This is being done through a think tank constituted of “Indian” tech companies, relevant government bodies, industry associations, civil society and research institutions. The decision to constitute this think tank follows from both domestic and international compulsions. The domestic trigger is largely a fear of ceding the fast-growing e-commerce market to foreign interests, as exemplified by the rhetoric around the recent sale of Flipkart to Walmart. Simultaneously, India is under intense pressure to negotiate international rules on e-commerce under the World Trade Organization (WTO). Naturally, this think tank must carefully evaluate intersections between future domestic and international policy frameworks.
While the e-commerce think tank is ostensibly supposed to be of a multi-stakeholder format, some voices are louder and more prominently represented than others. Accompanied by the facts that the history of the Indian private sector’s policy demands from government is chequered with short-termism, and that policy research on the exigencies of the “new economy” is still in its infancy, the government has its task cut out.
To be fair, many within the government recognize that a sober and holistic assessment is required to balance domestic and international concerns, particularly since e-commerce is already shaping the new contours of international trade. For instance, e-commerce has featured in high-level discussions on each of the mega-free trade agreements, including the Regional Comprehensive Economic Partnership (RCEP) of which India is a part. India has resisted the inclusion of e-commerce in RCEP, a position backed by domestic mercantile lobbies. More importantly, the WTO also anticipated a high degree of global attention to e-commerce and established a related “work programme” in 1998. Despite its high stakes in the multilateral system and now also in digital markets, India has maintained a reticent stance even in this forum.
The WTO work programme covers different aspects of e-commerce not limited to e-retail. It examines issues arising from “the production, distribution, marketing, sale or delivery of goods and services by electronic means”, which is the de facto multilateral definition of e-commerce. India has only played a nominal role in the work programme, even though the discussions are consultative in nature. Perhaps limited engagement is a function of the lack of specialist capacity within government, which may partly be overcome through lateral entries. But this capacity building will take time. Meanwhile, Indian negotiators were caught completely off-guard at the 11th WTO ministerial conference last year. Over 70 countries advocated for formal introduction of e-commerce related issues into the Doha Round of negotiations, in a marked departure from disaggregated advocacy through the US and EU-led interest groups in the past.
In days when globalization worked in the favour of advanced countries, they favoured this system over all others. Today, countries such as the US are virtually abandoning multilateralism in favour of a reversion to exceptionalism and mercantilism. It is up to large developing economies such as India to sense and respond to the winds of change. The country must become a propositional leader in the multilateral sphere, rather than embracing inertia or negativity. This transition will require internal clarity on economic and political goals, with well-defined milestones to achieve them.
To begin with, the think tank should adopt an appropriate definitional framework for accommodating a broad vision of e-commerce. India’s operating definition of e-commerce derives from foreign direct investment policy, according to which: “e-commerce means buying and selling of goods and services, including digital products over digital and electronic network(s)”. This is a very narrow point of departure, envisioned only for e-retail through a “marketplace-based” model. And marketplaces are disallowed from influencing the price of goods or services. Consequently, it is possible to interpret that several services-driven e-commerce companies, such as those operating taxi-aggregation services, currently function in violation of policy. The extant definition also excludes data-driven internet companies which do not engage in front end transactions. A broader approach will help establish greater policy certainty which can drive economic growth.
The recommendations of the think tank should also uphold WTO principles such as “national treatment”, to preserve the larger multilateral ethos. Most bilateral investment treaties inked by India also include national treatment clauses, which prevent discrimination between foreign and domestic investments. The think tank could easily seek support for Indian companies, which no foreign entity could call out as discriminatory, such as asking for fiscal farsightedness within an accommodative tax policy or scientific research grants for the tech sector. Earlier in May, the Delhi high court refused to restrain international arbitration initiated by Vodafone and underlined that India should not invoke domestic law for its failure to perform international obligations. The think tank must therefore suggest ways that will insulate India from future international proceedings, and help the government signal that the country is open for business on fair and equitable terms.

Tuesday 26 June 2018

CAIT To Hold Protests In 1,000 Places To Oppose Walmart-Flipkart Deal

On June 11, 2018, the Confederation of All India Traders aka CAIT threatened a nationwide agitation if the government clears $16 Bn Walmart-Flipkart deal. As no concrete action has been taken so far by the government in this regard, CAIT has now announced to hold dharnas in 1000 places across the country on July 2.
“The Walmart-Flipkart deal will lead to retail slavery in the country,” CAIT said in a media statement.
Soon after the confirmation of the Walmart-Flipkart deal, CAIT also approached the Competition Commission of India (CCI) stating that the deal will create unfair competition and an uneven level playing field for domestic players.
CAIT had also written to commerce minister Suresh Prabhu asking the minister to let the traders’ bodies know the steps being taken by the government to scrutinise the deal. Also, CAIT wrote to the finance minister Piyush Goyal claiming that the Walmart-Flipkart deal would be “cancerous” for the Indian retail industry.

CAIT’s Take Over The Walmart-Flipkart Deal
Since the $16 Bn worth Walmart-Flipkart deal was announced in May this year, the representative bodies of e-sellers of India like All India Online Vendors Association (AIOVA), and CAIT has been pushing the government to call off the deal in the interest of local retailers.
As CAIT president B C Bhartia and secretary general Praveen Khandelwal said, “the ecommerce market in India had been following ill-designed business practices. These practices had been adopted by various leading ecommerce players with a single motto of controlling and dominating the retail trade by offering deep discounts and predatory pricing.”
They further alleged that ecommerce platforms are grossly and openly flouting ‘Press Note No 3’ of FDI (foreign direct investment) policy issued on March 29,2016, which restrains ecommerce companies from influencing prices.
CAIT further stated that the government had remained a mute spectator here.

Flipkart’s View On The Matter

Though an email sent to Flipkart by Inc42 did not elicit any response till the time of publication of this article, Inc42 earlier reported that the top executives of Walmart India and Flipkart met with CCI member Sudhir Mittal to explain their activities in India after the $16 Bn Walmart-Flipkart merger.
During the meeting, the executives of both the companies reportedlyapprised the regulatory authority of the American retail company’s global sourcing plan from India, which includes sourcing from farmers, working on the model of kirana stores, and its supplier development programmes.
In their application to the CCI, the two companies have said that the acquisition, proposed through Walmart International Holdings, doesn’t raise any competition concerns.
It must be noted that the Indian government has already set up an ecommerce think tank to take proactive action on issues surrounding the $200 Bn worth ecommerce market. However, no guidelines have been issued by the think tank yet.
As many as 127 groups have now come together to oppose the Walmart-Flipkart deal including the local retailers. Other signatories also include networks like RSS-affiliated Swadeshi Jagran Manch (SJM), National Fishworkers Forum and the National Hawker Federation. Will the upcoming dharnas by CAIT will be able to force the government to take any strict against the Walmart-Flipkart deal, only time could tell.

Google could make its ecommerce debut in India around Diwali 2018: Report

The ecommerce market in India might be poised for a big boost as a new report suggests that Google might be planning to launch its own platform to compete with the likes of Amazon and Flipkart. The news comes after Google was reported to be in talks with Flipkart for a $2 billion investment post its deal with Walmart.
According to Business Standard, Google may have now shelved its plans to invest in Flipkart. Sources tell the publication that the Mountain View-based tech conglomerate is attempting to go solo in its ecommerce foray, and that it might do so starting with the Indian market. Sources told BS that the launch of Google's ecommerce platform could happen around the time of Diwali this year.
Google seems to have backed out of investing in Flipkart after seeing Walmart shareholders get jittery post its $16 billion deal to acquire 77 percent of Flipkart. ‘’Google started having second thoughts as it felt that the valuation that SoftBank Group, Tiger Global (investors in Flipkart) quoted was inflated,’’ a Flipkart executive who didn’t want to be named told the publication.
While Google did not officially reply to the report, a spokesperson told the publication that this is all “speculation”. However, sources said that Google has been working on its ecommerce plans since the last one year and has been “rather secretive” about it. The company’s ecommerce venture is said to be led by Caesar Sengupta, Vice President of Product Management at Google, who also leads its Next Billion User initiative.
The report further notes that Google’s Tez payments platform was “launched with the idea of populating the seller database”. Google also recently invested $550 million in Chinese ecommerce platform, indicating that the company is indeed serious about its plans to enter this space.
Google is not the only one readying to test the ecomm waters in India. Mukesh Ambani led Reliance Industries and Facebook are also reportedly planning to diversify their offerings in India’s $200 bn worth ecommerce market.
Experts believe that the growth story of ecommerce in India looks positively green. “With the massive user base, India looms as an attractive market for retailers. It’s currently estimated that 15% (200 million) Indian consumers will be shopping online by end of 2018,” said Adrian Lee, Research Director, Gartner.

Ecommerce War Zone In India To Have A New Army: Search Engine Giant, Google

Expanding from just a search engine to be a job guide to taking over our music playlist to becoming a voice assistant etc. Google has it all. Already being an integral part of our lives, it seems Google’s ambitions are just not done yet. As the global Internet giant now wants to be the next shopping destination for India.
Yes, you heard it right. According to recent reports, Google is now planning to launch ecommerce business in India later this year and the launch may coincide with Diwali. However, a Google executive has termed these reports as mere “speculation”.
The development comes at the time when Google has already invested $550 Mn in Chinese ecommerce firm The two companies said in a statement that the deal is part of a strategic partnership to jointly develop markets. Earlier, Walmart and had also entered a strategic partnership.
In regards to its India foray, it has been reported that Caesar Sengupta, who leads product management at Google’s global headquarters, is likely to test the ecommerce launch in India before taking this new business to other emerging markets. If all goes well and as per schedule, India will be the first country to experience Google’s ecommerce foray.
The company is expected to get a huge benefit of its subscriber base of over 18 Mn (for Gmail) and several other features including supporting vernacular content – which will further help it gain insight into the purchasing power and choices of millions of online consumers.
The news also comes just two months after it was reported that the global search giant was planning to invest $1-2 Bn in Flipkart via Walmart, which recently acquired 77% stake in the homegrown ecommerce unicorn for $16 Bn. While the investment in Flipkart is still under consideration, the Google’s move into ecommerce is not at all surprising.
Google’s first attempt in Indian ecommerce can be traced back to its Great Online Shopping Festival (GOSF) – an online shopping event launched by Google India in December 2012 in collaboration with a number of Indian online shopping platforms.
GOSF was portrayed as India’s answer to the hugely popular ‘Cyber Monday’ sales in the US. However, in November 2015, the company discontinued it due to growing popularity of ecommerce companies like Flipkart and Amazon India. GOSF also set the foundation for several online sale events hosted by players like Flipkart, Snapdeal, and Myntra among others.

Google: Setting Up Base To Enter The Indian Ecommerce War

Ecommerce is not a new space for Google. It has been in works for the past one year under the wraps, and several initiatives of Google in India support its ecommerce ambitions in the country.
For instance, earlier it has been associated with some 2,000 workshops helping the company to identify sellers on its ecommerce platform.
The company has also partnered with business chambers for digital programmes. Further, many pilots are being scaled up to meet the ecommerce targets. At the same time, more than 15K sellers have been identified for its ecommerce platform.
Further, it is being suggested that Google Tez was launched with the idea of populating the seller database.
For rural India, the company has been strengthening Internet through its ‘Saathi’ initiative. Through 48,000 Saathi’s across rural India, the company wants to offer assisted shopping until the masses are comfortable with the process.
Further, with its paid advertisement listing service Google Shopping, the company plans to make it more of an omnichannel experience to encourage brick and mortar retailers to list with Google.
To be noted, in the US, Google Shopping enables offline retailers to see what is in their stores for free as well as a mark on Maps. The company plans to launch this feature along with several others to increase the number of sellers on its platform.
The IBEF expects the Indian ecommerce to reach $200 Bn by 2026while Indian government’s Economic Survey 2018 revealed that India’s ecommerce market reached $33 Bn registering a 19.1% growth in 2016-2017.
In a deeply competitive Indian ecommerce market, entry of Google, which apparently has a huge user base in India already is bound to cause a huge challenge for existing players like Amazon India and Flipkart on one side. However, the plan to go solo is a huge bet and an interesting watch on the Google’s side. On the other, it will be worth noting what strategies existing players bring to the table to tackle the competition from the Internet giant.

Plastic ban: E-commerce may win extra time

Online businesses in a tizzy over Maharashtra’s ban on single-use plastics appear to have won a reprieve after the state government agreed to a plea from ecommerce companies including Amazon for more time to comply with the new rule. 

The ban, effective from June 24, is expected to significantly hurt online retailers, delivery firms, and logistics platforms in terms of costs and delivery timelines, with Mumbai and Pune accounting for 25-30% of ecommerce orders nationally. 

Ecommerce firms including Amazon wrote to the Internet and Mobile Association of India this month seeking its help to appeal to the state government for an extension to be able to change their packaging to recyclable material. The state government is likely to grant an extension of up to 3 months to comply with the ban, according to IAMAI president Subho Ray. 

Industry insiders involved in the talks also said the government is likely to grant ecommerce and retail firms time till August for the implementation of the new notification while maintaining that no coercive methods will be adopted while enforcing the ban. 

The extension to ecommerce companies matches that given to retail packaging firms by the state government for submitting their recycling plans. 

Online businesses such as Flipkart, Amazon and Paytm Mall are now required to upgrade their packaging material in Maharashtra to corrugated (cardboard) boxes, which are about 30% more expensive than plastic packaging material, according to industry estimates. Packaging costs presently account for 1-3% of the value of an online order, on an average. 

“The plastic ban is going to impact the ecommerce industry more than anything else,” said Abhishek Bansal, CEO of logistics firm Shadowfax that undertakes deliveries for Paytm Mall and Amazon. “Even for us, there are strict mandates on the kind of packaging that can be used.” 

Amazon, Flipkart, Paytm Mall, Snapdeal and ShopClues did not immediately respond to emailed queries. The ban on single-use plastic bags and cutlery has already hit business for food-delivery platforms in the state. The ban on single-use plastic bags and cutlery has already hit business for food-delivery platforms in the state. 

Food aggregators Zomato and Swiggy seem to have witnessed a dip in order volumes on day one of the ban with restaurants suspending delivery of items such as gravies that need water-proof packing. 

Swiggy and Zomato said they are helping their restaurant partners get access to alternative packing inventory on priority, with Swiggy sourcing such material from Mumbai and Bengaluru. Karnataka imposed a blanket ban on manufacturing, storing, distributing and using single-use plastics in 2016, although its implementation isn’t entirely effective. 

Aspokesperson for Zomato said “it was too soon to size the impact (of Maharashtra’s ban on plastics on order volumes).” “While we support the government’s ban on plastic, alternative packaging for delivery will increase restaurants’ costs by 20% at least,” said Santosh Shetty, president of Ahar Mumbai, which represents more than 8,000 restaurants and bars in the city. “This will have an impact on prices for consumers and will also further hurt restaurants, which are already reeling under the effect of GST.”

The new rule also affects ecommerce orders placed in Maharashtra for which products have to be sourced from other states where such a ban in not in place, said industry sources. Also, given that ecommerce companies typically stock 30-45 days worth of inventory, most of them are rerouting their existing packaging material in Maharashtra to other states. 

Packaging firms Bizongo has started adding disclaimers on its material for ecommerce firms operating in the state, mentioning the specifications of the plastic used. 

While Maharashtra’s new rule has hit general trade, offline stores and street vendors the most, internet firms lament the lack of clarity over the kind of plastic that is banned and recycling options. “There has to be more clarity and the ban should give everyone the means to recycle, and firms will follow that,” said Sandeep Padoshi, founder of logistics firm Wow Express, which handles deliveries for ecommerce firms such as beauty products retailer Nykaa. “If we fail to follow that recycle plan, then penalise us, not now.”