India Proposes New Electronic Commerce Regulations Focusing on Data Rules

NEW DELHI / MUMBAI (Reuters) – India on Saturday presented a new policy proposal for its burgeoning e-commerce sector, focused on locating data, improving security protection measures privacy and the fight against the sale of counterfeit products.

The proposed recast, which would likely increase the sector's operating costs, comes two months after the country amended the regulations governing foreign direct investment in electronic commerce.

This has forced retail giants Amazon.com Inc. and Flipkart, owned by Walmart, to restructure their operations in India, and the latest reforms have led to further upheavals.

"In the future, economic activity will likely follow the data," says the widely anticipated draft policy document. "It is therefore essential to keep control of the data to ensure the creation of jobs in India."

The new rules provide for the localization of more data centers and server farms locally, in a broader effort to localize data by the South Asian nation, which is one of the fastest growing online markets in the world.

In 2018, the Indian central bank forced payment providers such as Mastercard and Visa Inc. to store Indian user data locally.

"Steps will be taken to develop data storage capabilities in India," says draft rules on e-commerce. "A period of three years would be granted to allow the industry to adapt to data storage requirements."

Flipkart and Amazon indicated that they were reviewing the draft rules and that they would share their contributions with the government.

The proposed rules are also aimed at creating a "legal and technological framework" that can help to impose restrictions on the cross-border flow of user-generated data, movements that may affect not only e-commerce platforms, but also social media companies such as Alphabet. Google Inc. And his rival Facebook Inc.

India also plans to require all e-commerce companies to provide access to their data stored abroad whenever official requests are made. The rules, which come at a time when New Delhi is working on a broader data privacy law, also prohibit companies from sharing data stored abroad with other companies, even with consent. of the user.

Other proposals include the obligation of all websites or e-commerce applications operating in India to have a locally registered business entity and the increased responsibility of e-commerce players to ensure that the products sold on their platforms are neither counterfeit nor pirated.

"Many issues covered, bold decisions," said in a tweet the All India Online Vendors Association, which represents more than 3,500 online sellers.

New Delhi invited comments on the proposed rules before March 9, after which the rules will probably be formalized.