Ecommerce

How The Indian Government is Toughening up on the E-commerce Sector

With the Draft National Policy Framework on e-commerce, the Indian government is looking at creating a single regulator for the e-commerce industry.
How The Indian Government is Toughening up on the E-commerce Sector
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Entrepreneur Staff
Senior Correspondent, Entrepreneur India
3 min read

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

The frontrunner of the Indian startup industry has been the e-commerce segment. The marketplace model has been a favourite of entrepreneurs which only explains the boom of the sector. From the introduction of cash-on-delivery to opening up the possibility of returns for goods that don’t meet expectations, the Indian e-commerce market is a booming one.

According to a report by India Brand Equity Foundation, the Indian e-commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion as of 2017. The report also states that online retail sales in India are expected to grow by 31 per cent to touch US$ 32.70 billion, led by Flipkart, Amazon India and Paytm Mall.

The acquisition of Flipkart by Walmart only reinstates the fact that the Indian e-commerce industry has the world’s attention.

However, there have also been hiccups of late. Recently, the government had said that the cash-on-delivery option by e-retailers is not authorized. And now with the Draft National Policy Framework on e-commerce, the Indian government is looking at creating a single regulator for the e-commerce industry.

Here’s looking at what the government expects to do in the e-commerce segment.

Setting up a Single Regulator

According to reports, the government is looking at establishing a single regulator for e-commerce in the country. This regulatory body will be looking at all the issues in the sector. This will keep the sector regulated and help to curb scams in the sector.

Data Storage

The Indian government has been looking at data security and is now considering asking e-commerce and social media firms to exclusively store customer data locally. While this could be in tandem with Indian e-commerce companies, this could also hamper the growth of global e-retail giants like Amazon and Walmart. For these e-commerce giants, the Indian userbase is one of the highest all over the world. The government could give these giants time before localization of data becomes mandatory for all.

Mergers to be Under Scrutiny

With Walmart’s acquisition of Flipkart, it seems the Indian government has woken up to the fact of regulating mergers as well. The acquisition of Flipkart too saw a lot of protesters protesting against the greater presence of Walmart in India which could hinder the growth of smaller retailers in the country. According to reports, in the Draft National Policy Framework the government is also looking at tightening the scrutiny of mergers in the e-commerce sector so that small deals which could potentially distort competition are compulsorily examined by the country's anti-trust regulator.

Payments

The government has been looking at payment options being offered by e-commerce companies, The introduction of UPI too meant that the government is taking the digitization of payments seriously. Now, according to reports, the centre could soon ask e-retailers to include the home-grown card network Rupay as one of the payment options.

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