New Ecommerce Policy: Flipkart, Amazon May Not Be Forced To Store Data Locally Except Few Categories

The Department for Promotion of Industry and Internal Trade (DPIIT) is in talks of finalizing a new draft enforcement policy, which encapsulates a series of rules and regulations for ecommerce companies.

The new draft policy has proposed a regulator for the sector and an ecommerce law that restricts information these firms can store, use, transfer, process and analyse.

Let’s understand more on this topic.

All the Rules Set Under the new Guidelines

As per the new ecommerce law, all the ecomm companies will:

• Restrict such information, which can be stored, used, transferred, processed and analysed,
• Identify issues unaddressed by existing regulators,
• Enable probe, block entry of companies and ecomm activities, which question or threaten the country’s security,
• Ensure consumer protection and fair competition
• Companies must submit data in 72 hours, if asked for by the government, else they’ll have to pay a penalty
• Protection of users under 18 years of age

Data Localisation

DPIIT is focused on data localisation, this time more than ever. It is sought to impose and tighten controls on user information being stored overseas.

According to the draft, the government has the right to review, investigate and take action against any ecommerce activity that threatens the country’s security.

The country of origin and value addition in India will have to be clearly specified by ecommerce entities for imports and exports.

The draft proposes to combat cross-border flow of information pertaining to defence, medical records, biological records, cartographic data and genome mapping without appropriate authorisation.

Since last year, it has been very vocal about the cross-border information flows and payment for and duration of data stored abroad as well as locating computing facilities within the country.

What New Has Been Added?

Along with focussing extra on the issue of data localisation and protection of national user data within the grounds of the country, the new draft has also added new guidelines into it.

It aims to lift up and gather all such sellers that are currently offline, in terms with computerisation and digital payment enablement.

It also radicalizes the protection of users under the age of 18 years, since they are unable to enter into valid contracts with their ecommerce service providers. This puts them under risk, since they cannot enforce their rights.

Also, payments made through tokens on online platforms will now have to be channelized through the Liberalized Remittance Scheme (LRS), prepaid wallets or online payment gateways authorised by the Reserve Bank of India.