Jul 17, 2018

Urgently needed - an integrated E commerce policy for India

image of E commerce policy in India
E-commerce policymaking in India is a story of missed chances. As late as couple of months ago, the government was in the process of setting up a think-tank to formulate national E-commerce policy. It would take another six months for the rough contours to be formed, and for the interdepartmental heads to come to some kind of consensus, or not. A reason for not formulating a national policy was that the area of B2C E-commerce is handled by various ministries/departments ranging from India post, RBI, commerce, industries, finance and IT. Coming as late as it would, even if it comes within scheduled time, it would still make a good joke but for the fact that it is true. 

Image of E commerce policy in India

To put things in perspective, we are at a stage where India has been reduced to a marketplace for plunder by multinationals. On one had we have what The Economist calls the FAANGs (Facebook, Amazon, Apple, Netflix and Google/Alphabet) and on the other we have the Chinese BATs (Baidu, Alibaba and Tencent). The FAANGs peddle their own products in India and the BATs enter like trojan horses through investments in our supposedly homegrown PayTMs, Snapdeals, Olas and Flipkarts. Of course, Flipkart is now sold to Walmart, a deal with the loser label hung all over. Within the spectrum, and probably all over it, hangs the Japanese SoftBank with its might of money and investments in all that's tech and glitters. Chinese have now created a tech fund to emulate SoftBank. Among all this, we have very few E-commerce players that can be called truly Indian or India funded. Reliance is making an entry as per their recent announcement but then we have to actually see how it rolls out. 

China has been as clever as ever with its E-commerce policy. They effectively banned FAANGs from China and let their domestic firms build up capacity in the area. Whenever they let someone come through the Chinese wall (e.g. Apple), they ensured that they acquired the required technology to put up a competitor (Xiaomi and others). That's as foresighted as one can get, especially when it comes to policymaking in areas that exist at the cusp of various departments. It's not only their domestic policy that has clicked, but even their exports are an E-commerce success story. That's why when China earmarks ten areas of technology that it wants to dominates through its China 2025 plan, one needs to take notice and prepare. Lest it be misunderstood, it's not that China has got everything right. The BATs are struggling outside China and the overseas markets add less than ten percent to their bottomline unlike FAANGs who get more than half of their revenues from non domestic territories. Most of the Chinese presence abroad in this area is through investments in third parties and not their own brands. This strategy might or might not work in the long run. 

image of E commerce policy in India

And this is where we need to strategise better. The current method of think tanks making reports and joint secretaries from various departments mulling over it till the report twists itself to become what they like won't work. We need an apex body staffed with experts and bureaucrats with sense and direction to sit down and hammer out a policy or strategy. Something like a Technology and E-commerce department within current PMO might not be a bad idea to start with. We have already missed the bus. We are however not yet too late to do some damage control, avoid being a bazaar for the world, and if things go well, get our footing back. If that makes an already rich Ambani richer, it's a small price to pay.