8/24/2021 Our flawed e-com policy sends out awful signals

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Our flawed e-com policy sends out awful signals

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2 min read . Updated: 23 Aug 2021, 06:30 AM IST

Livemint

India’s regulatory framework for e-commerce needs to be market-friendly and not loaded one
way or another. Its failure to pass that test will go against our long-term economic interests
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The Indian state’s capacity for fair regulation and good governance has always held
out promise but seldom lived up to its potential. As a developing economy aspiring to
join the ranks of the developed, India’s regulatory ambitions fall woefully short of
what defines ‘regulation’ in the latter. Devesh Kapur and Madhav Khosla write in
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8/24/2021 Our flawed e-com policy sends out awful signals

Regulation in India: Design, Capacity, Performance: “A notable feature ofSubscribe

the newSign in
‘regulatory’ structure was, and remains, the presence of regulatory agencies that
operate HOME
with varying—and sometimes
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independence from the traditional e-paper

political

executive."
Get APP The problem gets
compounded when exceptionalism justifies the absence of a regulator’s political
autonomy, allowing the executive discretionary—and often arbitrary—controls over
the regulatory framework. Whimsy in legalistic structures can be interpreted as
deliberate whenever the rules end up favouring one set of private players over others.
Perversely, this represents a continuity of sorts: skewed policy frameworks that tilt in
favour of some and antagonize others have been India’s specialty over the past 50 odd
years. It results in inefficient allocation of resources and impairs long-term economic
efficiency. In 1991, a break was supposed to have been made with the past. The
problem, however, persists. Consider e-commerce.

The Centre’s latest e-com policy document kept its date with that tradition. Its design
bears the stamp of partisan but ineffectual policy-making. Vijay Kelkar and Ajay Shah
write in In Service Of The Republic: “Numerous elements of state coercion present in
India lack justification." The amended Consumer Protection (E-commerce) Rules,
2020, offer a live example of muddled policy with rule revisions destined to attract
litigation. The ministry of consumer affairs, food and public distribution, which OPEN
siredAPP
this new rulebook, claims the guidelines were framed in response to complaints from
consumers and traders. They are suffused with suspicion of private e-com players,
particularly multinational companies. Their additional compliance norms, overlaps
and conflicts with other regulations (such as our competition law), other restrictions
on sharing data within a company and barring of ‘related’ companies from selling
wares on the same platform seem like rules forged not only to hinder MNC e-com
firms but also Indian conglomerates which consider e-com an ideal unifying platform
for various products and services sold by their myriad consumer-facing companies.

No less disturbing is the amending of rules within a year of promulgation with an

apparent eye on upcoming elections in Uttar Pradesh. It is well known that small
traders and shopkeepers form an important segment of our ruling party’s traditional
support base. Their allegiance to the Bharatiya Janata Party has been observed to be
wavering, disillusioned by demonetization and dispirited by governance failures
during our second wave of covid. But electoral dividends from adapting a policy to
specific interests at the cost of others is unlikely to compensate for a setback to
India’s desire to be counted as a global business destination. For that, all rules need
to be market-friendly, serving all participants equally, not loaded one way or another.
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8/24/2021 Our flawed e-com policy sends out awful signals

While it is true that policy cannot be divorced from the political economy,Subscribe
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