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India’s Draft National E-Commerce Policy: A Bollywood Drama in Four Acts

Klaus Stoll

This article was co-authored with Prof Emeritus & Senior Scholar, York University, Sam Lanfranco.

India's recently published Draft National e-Commerce Policy, prepared by the Indian Commerce Ministry think-tank, can be read like the script of a four-act Bollywood drama.

Act 1: A match Made in Heaven

They were the dream couple: Princess India and Prince IT.

She was full of cultural richness and diversity, with beauty, mystique and natural resources. She also a dark side. She harbored the world's largest number of impoverished people, with little infrastructure, and facing sparse economic prospects.

He was young, with enormous potential. One day he would conquer all. He arrived like the sun rising after a long cold night. He had a solution to every problem. He would bring equality of access to a nearly unlimited economic playing field

She had the people and the land he needed. He would put them on the path to prosperity. Her children would become fat and content.

She was a willing lover, giving him all he asked. She sent her children to school to learn his ways. Programs like Digital India "Power to Empower" initiative, launched by Prime Minister Narendra Modi midyear 2015, were implemented to strengthen his hold of over the land. The dream would become a reality.

The Princess had good reason to believe in her choice. Her Prince, shining and full of promise, made significant progress on some fronts. 1.23 of her 1.3 billion children carried Aadhaar digital biometric identity cards. Nearly all (1.21 billion) had mobile phones, almost half with smartphones and connected to the Internet. Her country became the world's fastest-growing fifth-largest economy. By 2017 exported IT services garnered $154 billion in revenue, were the fastest-growing part of the economy and the largest private-sector employer. Technology start-ups mushroomed to 3,100 in 2018–19.

Their big wedding dance scene, insanely happy, had predicted this bright future!

Act 2: Disenchantment

Even matches made in heaven can fade with the passage of time. The Princess traveled her land, and something seemed not quite right. The resources that had gone into the Prince's IT efforts resulted in a 51 percent growth in e-commerce but captured only about 3 percent of the national retail market. Some of her children had become much richer, but they were mostly the few who had been rich before — most of her children, those supposed to prosper, were as poor as ever. What had gone wrong she asked her people. They were quick to answer. Mother of us all who cares, we know that you and the Prince wanted to help, but the Prince has many distant relatives who have bad intentions. When we started to use the technologies, they came from abroad and destroyed our businesses. They used investor money to undercut every effort we made until we were gone. They took control of marketplaces and dictated prices that made them unimagined profits which they took abroad to their homes.

That was not enough for them. The "price" of their technology was access to our personal data. They mined and monetized our data for their profits. The Prince and his relatives have taken our money and our souls. We have gotten little in return.

When the Princess heard this, she became furious and turned into the Hindu Goddess Kali, in her earliest guise, as a destroyer of evil forces. She's clever and vicious, but to plot her revenge she turned to those who were even more dangerous and fiendish than she: her bureaucrats. She asked: What can I do to make my people prosper and punish the wrongdoers?

Her bureaucrats went into their ministry. They thought and thought, and talked and talked. They came forth with a policy egg they named the "Draft National e-Commerce Policy," a policy egg pregnant with bureaucratic self-interest.

Enter the slow waltz dance of the bureaucrats, to seduce the goddess Kali.

Act 3: The Reckoning

And the bureaucrats said: Your people are right. The relatives of the Prince are greedy, unscrupulous robber barons. It is the people's data they take, and it makes them rich. They monetize data into marketable products. They monetize and sell data that is not their own. Like drug addicts, they are hooked and totally dependent on data. Day and night, they think about nothing other than how to get more data, and how to turn it into more marketable products.

They profess to collect data in the name of development, prosperity, and innovation. They love India not for what they give it, but for what they can get as India's people become one of the world's biggest sources of monetized data. The more data they control, the more they can monopolize markets and innovation. They tell the Princes that this will obstruct her children's access to innovation and economic opportunity. This will negate Prince IT's promise of equal access to nearly unfettered opportunity. Oligopolies controlled by the few will never permit access to equitable prosperity!

The Princess/Kali is reminded that data in and of itself is not a bad thing. Processed big data will be the lifeblood of future socio-economic activity. The importance of data will grow as Artificial Intelligence (AI), and the Internet of Things (IoT) populate the data cloud with clusters of data asteroids of use for a myriad of innovative uses.

This causes Princess India to shed Kali and return with three questions. What are one's rights with regard to the uses of one's individual data? What are the proper uses for data in the cloud? How is this done to promote equitable prosperity? Princess India begins to glimpse the light in the data cloud, and the promise of "India's Data for India's Development." Good policies will bring advantages and opportunities to all. The IT Prince husband's marital promise will come to pass.

Princess India, convinced she would get her will, returns to bull benevolent human form and asks: My wise servants, what shall I do? They reply: To control data, you need to establish who owns it, and the rights and obligations of ownership. Your subjects must know that only they own the rights to their data and that the data cannot be used without their consent. Even anonymous data need policies to regulate the use and protect rights under the law.

The Princess is told don't be alarmed by such control in the hand of your subjects. As the world's largest democracy India will become the world's largest digital democracy. Indian data and all that comes from it belongs to India and its citizens. The sovereign right to this data cannot be assigned to strangers, even if they are your husband's distant relatives.

Entities that collect or process data deemed private under Indian law, even if stored abroad, would be required to adhere to Indian data policies. India will be like an island with data sniffer dogs at every port. Transgressions will be caught and prosecuted to the full extent of the law.

Cross-border data flow regulations will ensure that Indian data generates value for India. Negotiated access will adhere to Indian data use policies. India's governance structures will do what is necessary under its laws and regulations to ensure that it will fulfill its holy duty to you, Princess India, to generate equitable benefits, including appropriate taxes and revenues to finance governance.

The bureaucrats further tell the Princess that proper policies and data regulations will benefit India in many ways:

  • Protecting the privacy and data ownership rights of citizens
  • Enabling proper data access for start-ups and Indian data use innovation
  • Promoting the domestic use of data for Indian economic gain
  • Controlling and pricing access to government data for legitimate uses
  • Requiring e-commerce entities operating in India to be registered in India
  • Having taxing and duty structures that level the economic playing field
  • Ensuring that taxes, duties and economic gains from India data stay in India
  • Enacting data use policies that protect national security and law and order
  • Regulating intellectual property to fight counterfeits and protect brands

The bureaucrats propose a robust administrative, regulatory and legal structure, using a multi-pronged six issue approach dealing with: data assembly, regulatory issues, infrastructure development, e-commerce marketplaces, digital economy development; and e-commerce export promotion.

Collecting and analyzing data is also a strategic national task. Data focused agencies need to be established or strengthened, to support evidence-based data policy, and to track the economy through a digital "data lens."
Issues like compulsory intellectual property and data-licensing will require extensive research and review. Such practices can run afoul of principles of data privacy and data ownership.

India's position on policies like the World Trade Organization (WTO) efforts to permanently exempt electronic transmissions from duties will require extensive research and review. They may unfairly benefit rich developed country companies while preventing poorer countries like India from extract taxes on cross border trade. This is particularly problematic when cross border digital trade can consist of digital objects of considerable value, such as 3D printer production algorithms, AI algorithms, and the like.

The complex relationship between cross border source code flows, the terms of technology transfer, and the impacts on local industry and national security again require extensive research and review. This calls for appropriate national research funding and digital/data focused authorities with a remit to explore consequences and policies in these areas.

There are multiple emergent foreign investments and cross-border trade models. Some reflect a presence, with local supply lines, in a national marketplace. Others reflect a cross-border inventory-based model of sale and distribution. National policy has to balance foreign engagement in the Indian 'marketplace', investment restrictions, and cross-border inventory-based commerce.

Act 4: Princess India's dream: Dance of the Data Ministry. (heavy stomp!)

Content for the moment, the Princess falls into a slumber and is soon dreaming. In her dream, she sees an enormous mountain range made up of data, from which has sprung a mighty river of rupees that flows to nourish the country. But soon the river begins to dry until there is only a trickle, and the land turns to dust.

"What happened?", asked the Princess as she awakes. The land answers: "Your bureaucrats did exactly what they told you." They build an enormous all-knowing and powerful ministry of data that controlled all data. First, they took the data to control the marketplace, but instead of creating opportunities for all they just used it to create opportunities for their benefit, and to generate taxes and revenues. They did not care about opportunities and equitable prosperity. They forgot the people. They gave the data to the IT Prince's relatives who had learned how best to work with bureaucratic interests within the government.

The ministry was charged with empowering the citizens, protecting their rights and maintain their dignity. But gradually the ministry claimed those rights, imposing data governance from above and curtailing digital democracy from below.

Soon the ministry wielded more power, using artificial intelligence algorithms to extend control across all aspects of life in the land. The bureaucrats argued that AI made better, cheaper and faster decisions than could citizens with traditional governance processes. As the machines demanded more data, and the bureaucracy was given more control, the results left the poor even more marginalized. Left with little access to Prince IT's digital opportunities, and unable to sustain themselves on what little data they retained, despair permeated the land.

The Princess wept and asked: What shall I do? The country answered again: Do not leave control in the hands of the bureaucrats. Let them learn. Let us all learn that development and sustainability do not come from more data alone, but from its selective and wise uses. Help us understand that e-commerce does not mean more data manipulation, so customers buy more or buy what others want us to buy. Put data first in the service of needs, not wants.

Let us rebuild our social fabric, where sustainable human relationships are based on trust and respect. Sustainable commerce is a beneficial relationship between humans and not a crass want generation calculation.
Help us remember that sustainable and equitable business models are based on trust, dignity, and respect. Anything less makes a mockery of our human experience and the lessons learned. The marriage to the IT Prince should be to build on the shoulders of that historical experience, and not squander the Prince's promise in the pursuit of hegemonic market or political power.

With that, the Princess fully awake, looked at the mess the bureaucrats had created. She called them together, and said only two words: Think again! She continued: We are the world's biggest democracy and that should extend to the digital sphere and be in the service of all. How do we get there from here?

Postscript:

Like all Bollywood dramas, this one will end with a big dance scene. Will it be an elite affair, a waltz of the oligarchs, or an engaged dance of the people? The Princess is looking to her people to lead to which it will be.

By Klaus Stoll, Digital Citizen
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