India’s E-Commerce is COVID-19 Resistant, but Reforms are Required

Blaise Fernandes, Gateway House


Regulators must ensure a level playing field for all e-commerce players. This will benefit the consumer and turbo charge the MSME sector, and the Digital India and Make In India components of the government’s vision

 

There are two stories that remain COVID-19 resistant. One is that Amazon has seen a spike in its share price of over 30 percent since the onset of the pandemic, and the second is that of Jio Platforms would have attracted FDI of over $10 billion right in the midst of the pandemic.

This augurs well for the Digital India e-commerce story, which till date has also seen mega-sized investments, of $16 billion and an estimated $5 billion till date, in the e-commerce sector by Walmart and Amazon.

The flood of e-commerce investments is India’s last chance to revive the MSME and agricultural sector, but urgent reforms are needed.

Some of the factors that are attracting these global players are as follows: India has about 504 million active monthly Internet users; by 2022, India will have 850 million smartphone users; low data costs (global average of 1 GB is about $5, while in India it is 26 cents); State-aided broadband network is rolling out in 250,000 villages; India’s retail market offers a $1 trillion opportunity; 90 percent of retail is controlled by about 6.6 million kirana stores, which COVID-19 has brought closer to the customer; for multiple reason big retail formats have not found it easy in India, and; finally, in India, with the Facebook-Jio deal, the hub and spoke model for retail if unfolding.

It is important that the regulators safeguard against the ‘Amazonisation’ of the economy and over-dependence on one player. They must also ensure a level playing field for all e-commerce players. This will benefit the consumer and turbo charge the MSME sector, and the Digital India and Make In India components of the government’s vision.

To achieve this, effective steps must be taken. Some of them are:

The regulator must stay to ahead of the curve. There is data to prove that even the billions of dollars imposed upon big tech by the European Union and the US was a fraction of the profits they generated by the predatory tactics. This would require ongoing consultations with think tanks and academia, e-commerce dispute resolution becoming part of the daily routine for officers in every district, capacity building by way of training and refresher courses have to begin right away, and, international experts must be invited to conduct training sessions and faculty members from our training institutes in Mussoorie, Hyderabad, Nagpur and Bhopal must be sent overseas to study public policy in e-commerce.

The regulator will have to demolish the notion of a walled garden around platform ecosystems, and data and privacy laws must follow global best practices upholding the consumers’ interest. The digital divide is another area of concern and the regulator will have to ensure equal digital access, which will be the first step towards a truly pan-India market place and equal opportunity.

It will also be a step towards bridging the wealth gap. Secure but seamless payment gateways will ensure the digital divide is bridged faster.

E-commerce will make or break the MSME sector if the gatekeepers allow for free flow of products and do not stifle sale of smaller brands to promote their own branded products. This calls for an overhaul of the consumer courts and redress forums. The use of e-courts for consumer disputes will safeguard the smallest buyers and sellers, even in the remotest part of India.

Farm-to-fridge via e-commerce is the accelerator to double farm income, but the bottlenecks need to be addressed. Programmes such as GI tagging of goods, micro food enterprises, and agroecology will get a boost with a common market via these platforms. Given the infrastructure bottlenecks in our agriculture sector, drones are a sure-fire way of bypassing these barriers and making farm-to-fridge seamless. The director general of civil aviation must be consulted on a drone policy for e-commerce. In the current pandemic, had there been a drone policy for e-commerce, economic activity would have continued without any break.

Self-reliance is built on the backbone of innovation and creativity. The Intellectual Property Act, 2016, will need revisiting to protect the IPR of the artisan from Bastar, the craftsman from Moradabad, the weaver from Kancheepuram or the Unnani or Auryedic practitioners who’s found an immunity booster for common cold.

In nation-states the rules are top-down, and platforms are the enablers to control minds and consumption patterns; while in liberal democracies the lack of control has enabled technology to dictate the agenda. Can emerging markets look at India for an e-commerce policy where the regulator has played a part, but not overregulated? The regulators should be kept far away from price controls and let the market dynamics play out freely. That will ensure an Atmanirbhar India.


The writer is the Director of Gateway House. He is also the President of the Indian Music Industry. He can be reached here. Views are personal.


This article was first published on moneycontrol.com

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