Consensus remains elusive on India’s e-commerce policy

While telecom dept wants server locations of global e-commerce firms in India, ministry of electronics and IT supports no such restriction


Commerce minister Nirmala Sitharaman has said that e-commerce should not be part of the agenda at the 11th WTO ministerial. Photo: HT
Commerce minister Nirmala Sitharaman has said that e-commerce should not be part of the agenda at the 11th WTO ministerial. Photo: HT

New Delhi: India is finding it difficult to reach consensus on a domestic e-commerce policy to effectively respond to a proposal of multilateral discipline in e-commerce as various government departments have contradictory views on the matter.

Though India has publicly rejected the push from some members of the World Trade Organization (WTO) to make e-commerce rules one of the deliverable agendas in the upcoming 11th WTO Ministerial in Argentina, it has simultaneously started preparing for a national-level policy on key issues under discussion.

“While we want to be part of the discussion and set the agenda on global rules on e-commerce, we have not been able to domestically resolve the right approach that we should be taking. Without evolving domestic consensus on contentious issues, we will not be able to engage on the matter on multilateral fora,” a government official said, requesting anonymity.

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For example, while department of telecom wants server locations of global e-commerce companies to be in India only, ministry of electronics and information technology supports no such restriction. “Both industry department and finance ministry are also opposed to allowing e-commerce companies to have warehouse models in India,” the official said.

“We are internally exploring whether it is in our interest to have multilateral disciplines on e-commerce or not. But various departments working at cross-purposes has made the job difficult,” the official added.

The Declaration on Global Electronic Commerce was first adopted by the WTO’s Second Ministerial Conference in May 1998 and urged the WTO members to establish a comprehensive work programme to examine all trade-related issues arising from global e-commerce. Ministers also agreed to continue their practice of not imposing customs duties on electronic transmissions until their next session.

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This is known as the temporary moratorium on e-commerce. The moratorium has been extended at subsequent ministerial conferences including at the Nairobi Ministerial in 2015.

The US now wants to convert the temporary moratorium into a permanent one which India is likely to oppose at the Argentina Ministerial, the official said.

Biswajit Dhar, a professor of economics at the Jawaharlal Nehru University, said India should be extra-cautious while negotiating on e-commerce or else it may lose the space to foreign players like under the Information Technology Agreement (ITA).

Under ITA-1, India agreed to abolish tariffs on hardware, which went against its domestic electronics manufacturing industry. “If large chunk of future business is going to happen through e-commerce, giving up the right to impose tariffs in future may go against domestic players and eliminate a source of revenue,” he added.

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WTO chief Roberto Azevedo during his visit to India last month met various domestic e-commerce companies in what was seen in Indian policy circles as a push to build consensus for setting multilateral rules at the WTO.

After a meeting with Azevedo in her office, commerce minister Nirmala Sitharaman said that though she is aware that many discussion papers have been floated on e-commerce, it should not be part of the agenda at the 11th WTO ministerial.

“I am ready to join the talks, but it is not part of my agenda for the upcoming ministerial. Because every country is having a big churn in e-commerce and technology is fast-moving. A final understanding on the matter is yet to be reached. Therefore, it will not be proper to regulate or define e-commerce at present,” she told reporters.

Azevedo on his part said India is within its rights to oppose any proposal on e-commerce at the WTO.

“Negotiations on e-commerce at this stage are very vague. There are 11 papers submitted on the issue. I myself am not very optimistic that we will solve very contentious issues such as server localization, data flows. I have not heard anybody talk about market access yet,” he said.

He met executives from technology start-ups such as Flipkart, Snapdeal and Paytm under the aegis of India International Chamber of Commerce.

When asked about the deliberations at the closed door meeting, Azevedo said representatives were generally curious about policy developments in the field of e-commerce.

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