E-commerce policy: Needed for speedy, inclusive growth

E-commerce can rope in lakhs of MSMEs in cross-border trade and multiply turnover and revenues enormously.

By Dhanendra Kumar

E-commerce globally has been a major catalyst and enabler for innovation, expanding frontiers and creating new business models for borderless markets, generating new skills and massive employment, increased consumer choices with ease of access and multiple applications in sale, marketing and distribution of goods or provision of services. In India, with its relatively young population (average age 29 years and 70% below 32 years), deep penetration of telecom and broadband, and explosive growth of the internet and mobile, e-commerce has grown exponentially.

During the pandemic and the shutdown of various services due to the lockdown, e-commerce acted as a saviour with home delivery of goods and various services. As India commemorates one year of the first lockdown, Covid-19 can be said to have resulted in a new normal with transformation in consumer lives, behaviour and preferences. As illustrated in a celebrated McKinsey study (https://cutt.ly/9xzcTxR), we have covered a ‘decade in days’ in adoption of digital. Behavioural changes have been witnessed in most areas like work, learning, health, travel, entertainment, etc, but the biggest surge has been in e-commerce, both in goods and services.

The regulatory environment has attempted to keep pace with the changing nature of e-commerce and expectations of the society. The Department for Promotion of Industry and Internal Trade (DPIIT) and the Ministry of Electronics and Information Technology (MeitY) have been reviewing guidelines for intermediaries and platforms in e-commerce and the social media, and redesigning FDI policies for balancing and harmonising varied and conflicting interests of stakeholders, in the inventory and non-inventory e-marketplace models and attempting to ensure a fair and level-playing field for all participants.

The digital interface during e-commerce processes with multiple agencies has resulted in a plethora of compliances, Income Tax Act 1961, Information Technology Act 2000, Consumer Protection Act 2019, FEMA Act 2000, Competition Act 2002, Companies Act 2013, Anti-Piracy Law, GSTN, DGFT, etc. In addition, handling, generation and protection of humongous data is a major issue under data protection laws. At times, there are requirements of compliances with various local and state laws, and during exports, adherence to foreign laws, many of which could be quite complex and rigorous.

As argued in a column in the Financial Express (https://cutt.ly/2xvLrop), e-commerce is one of India’s fastest growing sectors, for attracting FDI and creating jobs, and providing a pan-India market for lakhs of SMEs, and facilitating exports; its growth should not be stifled with red tape, bureaucratic rigmarole and avoidable policy restrictions. While attempts to create a level-playing field and avoidance of bias between vendors may be good, it must be ensured that this powerful tool, which has proved its enormous utility during the pandemic and, in fact, is credited for massive growth of many neighbouring and western economies, is not blunted through excessive bureaucratic labyrinth. There is also no need for creating a new regulator for the sector; the Competition Commission of India which is already seized of several cases can easily handle it, in addition to the other subject matter regulators wherever concerned.

India has a vibrant retail sector, bubbling with energy and a bright future. E-commerce can rope in lakhs of MSMEs in cross-border trade and multiply turnover and revenues enormously. Its role in facilitation of exports with linkages and access to overseas markets can also help inject competitiveness in our products and provide easy marketing avenues to our artisans, handicrafts, produce of women clusters, especially in rural and tribal areas in the hinterland, creating a lot of jobs and market opportunities, adding to inclusive growth.

Inclusive growth being an important objective of the proposed e-commerce/FDI policy, it should recognise and support new business models in both product and service segments, aimed at improving consumer experience and providing gainful employment to regular and gig workers with improved earnings. India, in fact, is the first country to extend protections to workers including the new-age gig and platform workers, which is being viewed with interest globally.

With the passage of the Code on Social Security 2020, policymakers have focused on financial and social security associated with employment to contemporary socio-economic realities. The issue of labour taxonomy attains critical significance today with digital platforms transforming the very nature of work. By affording independence, flexibility and choice, gigs and platforms have created a new form of work outside the traditional employer-employee arrangement, capturing the interest of overseas markets (https://bit.ly/397G5JN).
The role of platform workers amidst the pandemic has presented a strong case to attribute a more robust responsibility to platform aggregator companies and the State. In addition to delivery of essential services, they have also been responsible for keeping platform companies afloat despite the pandemic-induced financial and social crisis. This has cemented their role as public infrastructures who also sustain demand-driven aggregators and e-commerce platforms, as elucidated in the article ‘Secured future for platform workers’ (https://bit.ly/397w5QW), which may help in higher productivity and more sustainable employment, when many of them could potentially become mini-entrepreneurs.

This would, indeed, be a laudable objective for inclusive growth. This, however, would need to be facilitated by concerned public and private institutions as also the multiple regulators in the e-commerce ecosystem. This workforce will need time to achieve the standards of formal certifications and be at par with the already recognised trade registrations etc, and will deserve to be given adequate support in the bridge period during matters of labour governance, B2B sales or fulfilment-based models to new-age disruptions.

In an online services market place and to provide full support to regular and gig professionals rendering services on the platform, it must be imperative on the service platform to build their capacity through trainings, technology and access to high-quality consumables and tools. This ‘full stack’ partner engagement model would also help enable small businesses and gig workers to improve their earnings, and in due course become micro-entrepreneurs. The platform worker covered under such labour codes could be classified as a B2B purchaser irrespective of whether he/she has a GST registration or not.

We are in for exciting times, as we enter this decade, rightly called the ‘Techade’; 2020 has accelerated technology infusion in all segments of life and activity. The world is looking at India with expectations and we owe it to our nation.

The author is former chairman, CCI and ED, World Bank. Views are personal