The New E-comm Policy Is More About Politics Than Business

As the March 29 deadline for submission of comments and feedback on the government’s new e-commerce policy is upon us, we must review the policy’s flaws. Released only last month by the department of industrial policy & promotion (DIPP), the policy reads more as politics than a blueprint for Digital India.

Its overt nationalism can best be described as: “Indian people’s data is for mining only by big Indian companies, helping the government watch over everyone better.” Naturally, this will not wear well when the current heightened nationalistic fervour has receded. The policy is an example of how not to approach the idea of Digital India.

The e-commerce policy assumes that recording granular details of users’ online behaviour and monetising this data as a “national resource” for local economic exploitation is a tolerable social future, perhaps even the best. It goes on to say that the data of and about Indians is their property, but it also decrees that Indians are not allowed to store this data abroad, or to contract with others to do that on their behalf — except under draconian conditions, which include an absolute ban on the further transfer of that data from its foreign location.

In other words, this property is not fully convertible by the very individuals who purportedly own it. The policy treats the aggregated data of Indians as the aggregate property of India, which is a clever euphemism for Indian businesses. And these businesses can monetise this data preferentially, including selling its value abroad without limitation — so long as they store the data in India.

The “data localisation” imperative of this policy is a classic non-tariff barrier to the multinational “platform companies”. Requiring “data about Indians” to be stored and transacted for only in India, the policy favours Indian industry. But like most non-tariff barriers, its supposed object — keeping the foreign business out — is only incidentally harmed: under the garb of protection, the real cost falls on the consumers and small businesses.

Rules that require data localisation are in fact detrimental to the efforts of small and medium e-commerce companies in India. The country’s unreliable electricity supply prevents all but a few small and medium businesses from running their own servers, which could help keep their data in their own till. The most cost-effective alternative for them is to buy services in the global “cloud,” where, for a small monthly cost, they can have their services hosted and their data stored.

India’s proposed policy prohibits that approach, depriving all but the largest Indian businesses from succeeding in the e-commerce revolution. Every digital transaction will have to go through them, and we can all see perfectly well who they are.

It’s unrealistic to assume that India can build a local storage industry to employ people whose livelihoods in small and medium e-commerce ventures the policy threatens. Data centres are extremely efficient at converting electricity into profit but that’s because they hardly require workers. Producing and delivering, with perfect reliability, hundreds of kilowatt hours in order to create a few dozen jobs will never be economically feasible in India.

From its fundamentals to its details, the essence of this policy is to fight digital colonialism by putting local digital oligarchs in charge, securing to them both the profits of the domestic market and special benefits in exporting post-colonial digital products made from Indians. (The policy is explicit on the detail of forcing all incoming physical goods bought electronically through the “customs channel,” thus ensuring politics gets its cut.)

This regressive, anti-global approach is joined to the fundamental assumption that Digital India should be based on monetising citizens’ intimate life at home and in the market. Digital India can’t be a data mine in which we turn billions of human lives into raw material for a “fourth industrial revolution” whose destruction of human privacy will rival the destruction of our air, water, and climate by the previous revolution. Digital India must be an exporter of services based around the recognition of privacy, dignity, democracy and freedom. We are as ideally based to sell privacy-respecting services on the internet to all societies for cash as Silicon Valley is to sell privacy-disrespecting “free” services over the same internet.

The right e-commerce policy for India would emphasise the leveraging of the global internet to enable Indian businesses, generate employment, and ensure privacy and dignity. Instead of replaying the worst of the past, it is our triumph over digital colonialism that will really contribute to national greatness.―Hindustan Times

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