Home >News >India >E-commerce policy for data protection may further annoy US
The US has raised concerns over growing trade barriers in India. (Photo: istockphoto)
The US has raised concerns over growing trade barriers in India. (Photo: istockphoto)

E-commerce policy for data protection may further annoy US

  • The proposed policy suggests data generated by Indian users on e-comm platforms should be kept within country
  • A business entity needs to share such data with Indian authorities when required

NEW DELHI : The stringent norms for data protection and online trade, proposed under the draft e-commerce policy released on Saturday, may further annoy the US, which has raised concerns over growing trade barriers in India.

The proposed policy seeks to treat anonymized data collected in the country as a “national asset", suggesting that such data generated by Indian users on e-commerce platforms, social media and search engines needs to be kept within the country.

A business entity, which collects or processes any sensitive data in India and stores it abroad, needs to share such data with Indian authorities when required. Besides, such data must not be shared with a third party, including a foreign government, even with consumer consent.

However, there is no restriction on cross-border flow of data among commercial entities if the data has not been collected in India. To break the data monopoly of a few technology giants that creates barriers for new entrants, the policy also proposes that startups be given access to their anonymized data.

The US opposes data localization norms by other countries to ensure its leading companies, such as Amazon, Microsoft and Apple, among others, control the global cloud computing businesses. During the India-US CEO Forum meeting last week, US commerce secretary Wilbur Ross had expressed concerns over the proposed trade barriers in e-commerce, digital technologies and services and data privacy in India. India did not join a group of 70 countries led by the US, Japan and Australia to launch world trade organization (WTO) negotiations for a deal on trade related aspects of e-commerce in January.

“During negotiations, policy space must be retained to seek disclosure of source code for facilitating transfer of technology and development of applications for local needs, as well as for security. Policy space to grant preferential treatment of digital products created within India must also be retained," the draft policy added.

The policy also proposes that the current practice of not imposing custom duties on electronic transmissions under WTO rules must be reviewed in the light of the changing digital economy and given the increased role that 3D printing technology is expected to take.

The government has been striving to build consensus on an e-commerce policy to mitigate the policy vacuum on key issues related to the sector as well as to effectively respond to a proposal for multilateral discipline in e-commerce at the WTO.

An earlier draft of the policy by the commerce ministry was junked after e-commerce giants, including Amazon and Walmart-Flipkart, raised strong objections.

While the draft e-commerce policy has strongly recommended data localization, it has suggested a three-year sunset period for the industry to adjust before localization rules becomes mandatory instead of two years suggested in the earlier draft proposed by the commerce ministry.

On e-commerce marketplaces, the draft policy says a situation of “capital dumping" will be strongly discouraged, mainly to ensure a level playing field for small brick and mortar shops.

A digital technology expert speaking under condition of anonymity said a commercial company should not be forced to share its aggregate data with another company. “It should

be considered as the company’s intellectual property since it has invested in technology and talent into it," he added.

The draft e-commerce policy has also proposed to ban all gifts shipped to India through e-commerce route to put a check especially on Chinese e-commerce platforms misusing the provision. It mandated all e-commerce sites/apps available for download in India to have a registered business entity in India as the importer on record or as the entity through which all sales in India are transacted.

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