Digitalising Indian Retail: Capacity Building for a Global Context

E-commerce gained significant attention at the 11th Ministerial Conference in Buenos Aires in 2017, where 71 member states released a Joint Statement affirming their intent to advance negotiations on trade related aspects of e-commerce under the WTO ambit. E-commerce was first recognised in global trade agreements at the Second Ministerial Conference in Geneva in 1998, where member states adopted a Declaration on Global Electronic Commerce and called to establish a Work Programme to examine issues of e-commerce related to trade).

The Work Programme was required to pay specific attention to the economic, financial and development needs of developing countries. India participated in the early rounds of discussion, raising key issues of intellectual property in e-commerce in its communication to the Council for Trade Related Aspects of International Property Rights in 1999. Its representative noted before the General Council the importance of e-commerce, specifically e-retail, for development. But he also stressed the importance of providing adequate policy space for developing states to establish domestic policies to govern e-commerce, and to build capacity among domestic MSMEs. These concerns were echoed by other developing states. As a result of this fundamental disagreement, progress under the Work Programme has been slow in the past two decades.

Recent years have seen a marked shift in the positions of several developing and Less Developed Countries, which are moving now toward a global compact on e-commerce. China, Saudi Arabia, Thailand and Kenya are just a few of the states to have signed and participated in discussions under the Joint Statement Initiative. Another prominent trend is the emergence of regional, interest-based groupings to promote the use of e-commerce for development. For instance the Friends of E-Commerce for Development, a group of developed and developing countries that include Pakistan, Sri Lanka and Australia, are working together to use e-commerce in a manner supportive of local industry and small enterprises. Further, regional trade agreements or RTAs increasingly incorporate clauses related to e-commerce. A recent study found that of 275 RTAs registered with the WTO, 75 contained at least one clause dealing explicitly with e-commerce. Yet India continues to oppose the formalisation of talks on e-commerce under the WTO. In its communication to the General Council prior to MC11, India advocated continuing talks under the existing Work Programme without altering its mandate. Statements from Indian representatives at the WTO show this opposition remains grounded in apprehension, that the entry of global retail brands would significantly hinder the development of domestic retail enterprises.

Failure to develop a more nuanced negotiation strategy at the WTO may have significant consequences for India. It risks being cut off from the preferential market access to be gained from participation in any multilateral or plurilateral agreement. This would hinder the flow of investments into the country, and its integration with the global supply chain. By choosing to completely distance itself from ongoing negotiations, India also loses the opportunity to shape global rules of digital trade. Historically, states that adopted global rules and technical standards have gained a significant first-mover advantage.

To negotiate more effectively at the WTO, India must first build sufficient local capacity, so that domestic products can effectively compete in global markets. It can learn from the experiences of nations such as Malaysia, Singapore and Thailand, which adopted a state-led approach to online retail development, and are able as a result to participate in deliberations under the Joint Initiative.

The focus of this analysis is online retail, a narrower sector than e-commerce. E-retail is concerned primarily with the online sale and purchase of goods, while e-commerce includes a wide range of services such as OTT platforms. A key impediment to India’s participation in global talks on e-commerce is the apprehension that its domestic retail sector will be unable to compete with large global corporations: this can be overcome through capacity building backed by the state, to let domestic retailers harness online retail opportunities, and eventually compete with foreign entities.

This paper attempts to define the broad contours of a specialised development agency that could undertake such capacity building effectively. The next section surveys the existing literature to identify key capacity deficits faced by Indian MSMEs in adopting digital technologies and e-retail. Section 3 outlines India’s approach to regulating e-commerce, contrasting it with the specialised bodies in other developing countries, and identifying certain principles of regulatory design that inform their functioning. Section 4 suggests how these principles could be applied within the Indian context.

Attribution: Mohit Chawdhry, “Digitalising Indian Retail: Capacity Building for a Global Context,” Issue No. 007, February 2021, Esya Centre.

Database Regulation: Examining Existing Approaches and Considerations for India

Regulators around the world are scrutinising tech companies—the US, EU, India and other jurisdictions are filing competition lawsuits against large digital platforms, and the EU as part of its digital data strategy recently released drafts of the Digital Services Act, Digital Markets Act, and Data Governance Act on competition, content moderation, platform liability, and other aspects of digital technology. In India the government recently released draft frameworks for non-personal data regulation (the NPD Report) while a Joint Select Committee in Parliament is deliberating on the draft Personal Data Protection Bill, and the government indicates interest in a focus on developing artificial intelligence and related technologies.

Data is at the core of how digital platforms provide the products and services we use today, and is central to their functioning. It also has wider implications, and the transition from a paper-based system to a digital one offers multiple advantages not always related to technology: permitting better management of information, increasing security and efficiency, and providing information and insights to enable better decision making. Data is also being used at an unprecedented scale, in public service delivery, finance, healthcare, transportation, and marketing. A variety of stakeholders are collecting increasing volumes of data, whether personal, non-personal or a combination of the two.

Yet vast amounts of data are not useful in themselves without ways to make sense of them. This is what many emerging technologies do, from machine learning to the wide range of tools named ‘artificial intelligence’—they are methods to analyse and derive value from large volumes of data, and in many cases the way they work improves when given more diverse data to analyse. It is only possible to do so by ordering and organising data into specific formats depending on the intended use: this is the role of a database.

This paper examines how databases are afforded protection and details some key considerations for database regulation in India. It explores database protections in other jurisdictions, primarily the European Union and the United States. Section 1 defines a database, 2 explores the protections afforded by copyright law, 3 examines sui generis or standalone database protections, 4 explores protection by unfair competition laws, 5 examines the protections prevailing in India, and 6 lists emerging considerations and policy recommendations.

Attribution: Aishwarya Giridhar, “Database Regulation: Examining Existing Approaches and Considerations for India,” Special Issue No. 205, Feb. 2021, Esya Centre

Response to the Second Draft Report by the Committee of Experts on Non-personal Data Governance Framework

We at the Esya Centre are grateful for the opportunity given to us by the Ministry of Electronics and Information Technology (MeitY) to respond to the Committee of Expert’s Report on Non-Personal Data Governance Framework (Report). We appreciate that the Committee has attempted to set out a broad framework that seeks to regulate several facets of the use of Non-Personal Data (NPD) while identifying possible areas of concern. In our suggestions, we engage with the Committee’s key recommendations and identify areas which require greater clarity. We recommend actions that assist in creating effective regulation geared towards achieving defined goals and outcomes. Part I contains the summary of recommendations, and Part II contains a detailed analysis of substantive elements of the Report. We have structured our responses into 4 themes namely: i) the definition of Non-Personal Data, ii) overlaps with existing proprietary frameworks, iii) community data and HVDs and iv) the regulatory architecture.

Moderating Social Media in India: User-Generated Content in an Era of Viral False News, Disinformation and Hate Speech

Social media globally, and in India, is widely afflicted by two main problems: hate speech and false news. The reason this is a pressing problem is because eventually both these elements end up hurting democracy. At Esya Centre we have taken an in-depth look at the social media ecosystem in India to identify the problems and come up with potential solutions. While India has multiple bills in the works that aim at tackling some of these issues, the ambit of those bills is very broad and encompasses multiple themes. We’ve kept our paper focused on social media and how to moderate user-generated content.

For this paper, which is not sponsored by any social media company, we spoke with a range of companies, lawyers, researchers, and academicians in the ecosystem. We also studied developments in the U.S. and Europe and adapted from there suggestions that we think will help improve the ecosystem in India without killing business. However, this research does not reflect anyone else’s opinions.

Attribution: Megha Bahree, “Moderating Social Media in India: User-Generated Content in an Era of Viral False News, Disinformation and Hate Speech,” Issue No. 006, January 2021, Esya Centre

Nine Principles for India's Digital Economy

Global mobile data traffic was around 456 exabytes in 2019, of which India accounted for around 75 exabytes or around 16 percent, according to Ericsson. Around 14 percent of the global population resides in India and, consequently, the country punches slightly above its weight in terms of mobile data consumption. The size of India’s opportunity to unlock value through such consumption, is perhaps without parallel in the developing world. This can be achieved through a principles-based framework for governance of information technology (IT). The nine principles detailed in this brief can also aid the design of a new-age IT legislation, that fosters innovation, competition and growth:

Principle 1: Legal Recognition

Provide adequate legal recognition and clarity to new digital businesses

Principle 2: Level Playing Field

Level the playing field for small digital businesses and entrepreneurs to compete effectively, through

deregulation

Principle 3: Risk-Based Regulation

Encourage regulations that are activity-specific and prioritise consumer welfare over state control

Principle 4: Functional Classification of Intermediaries through Co-Regulatory Model

Leverage coregulation to help digital intermediaries evolve, innovate and scale

Principle 5: Transparent and Accountable Self-Regulation

Employ self-regulatory and co-regulatory bodies to offset the need for legacy regulatory constructs.

Principle 6: Platform Neutrality

Ensure that large businesses do not discriminate between equal business partners, and consequently reduce the probabilities of gatekeeping.

Principle 7: Privacy and Security by Design

Promote product and platform design that helps local companies access global markets with low compliance costs.

Principle 8: Fair, Reasonable and Non-Discriminatory

(FRAND) Terms Guide business conduct through the FRAND principle, to minimise the need for economic regulation.

Principle 9: Trust and the Global Internet

Promote the use of standards and protocols that build trust in the internet and leverage the wealth of Indian experience in multi-stakeholder collaboration and open design.

Attribution: “Nine Principles for India’s Digital Economy” Special Report, September 2020, Digital India Foundation and Esya Centre.

Response to the Report by the Committee of Experts on Non-personal Data Governance Framework

We at the Esya Centre are grateful for the opportunity given to us by the Ministry of Electronics and Information Technology (MeitY) to respond to the Committee of Expert’s Report on Non-Personal Data Governance Framework (Report). We appreciate that the Committee has attempted to set out a broad framework that seeks to regulate several facets of the use of Non-Personal Data (NPD) while identifying possible areas of concern. In our suggestions, we engage with the Committee’s key recommendations and identify areas which require greater clarity. We recommend actions that assist in creating effective regulation geared towards achieving defined goals and outcomes. Part I contains the summary of recommendations, and Part II contains detailed analysis of the Report. We have structured our responses into 4 sections on Competition and Innovation, Ownership and Access, Privacy and Definitions, and the Regulatory Framework. Within each section, we analyse the key recommendations made by the Committee and propose alternatives. We have sought to engage with the Committee’s recommendations on a first-principles basis and highlight areas which require greater conceptual clarity.

E-Retail, Consumer Demand and the Road to Recovery

I. Demand and E-Retail

The Covid-19 pandemic and ensuing emergency responses across the world are expected to affect firms through supply chain disruptions in the short run and demand declines in the longer run. Given the high share of Micro, Small and Medium Enterprises (MSMEs) as well as the low income of households in India, the country is at risk of a protracted economic downturn, especially given the steady decline in GDP growth.

India needs a two-pronged approach to generate aggregate demand. First, to bring jobs and income back to poorer households, especially for the rural population. Second, to facilitate spending by households who have the willingness and capacity to pay, primarily in and around urban areas. This can be done by facilitating e-retail, which has been a preferred channel during this period. With the element of experience removed from physical shopping, we see a shift in the playing field between online retail and physical stores. E-retail is also more capable of complying with evolving government regulations such as distancing norms, making it both a safe and competitively priced channel to help meet consumer demand.

E-retail regulation in India has a chequered past. For instance, the Government of India’s Draft e-Commerce Policy, which envisions e-retail as a segment within e-commerce, looks to regulate aspects ranging from data and digital infrastructure development to export promotion. It is essential that any future policy on e-commerce should support and incentivise technology adoption and sectoral transitions, such as from offline to e-retail.

II. Restrictions on E-Retail during the Lockdown

A survey of more than 2,000 online sellers conducted between April 27 and May 4 indicates the need for a facilitative policy direction. We find that most firms selling online prefer this channel to offline selling, but faced problems primarily of supply and demand during the lockdown period. A shortage of manpower was another important factor in this period, especially for firms that were previously operating at a larger scale.

Policy also played a role in hindering the operation of e-retail during the lockdown. A great deal of confusion was caused by unclear phrases and terms, for instance the definition of ‘essential goods’ was left unclear.  There was further a degree of inconsistency and differentiation in policy formulation. The adoption of differing standards for online and offline retail during the pandemic, despite the benefits of e-retail such as contactless delivery, is of particular concern.

The lockdown had a substantial impact on retailer supply chains, both online and offline. The initial impact seems to have derived from the lockdown’s sudden nature, and the resulting administrative confusion regarding passes, curfews, and freedom of movement. Businesses operating in multiple states or districts faced a significant challenge in obtaining the necessary permissions for their staff. Later in the lockdown they faced a shortage of labour as several migrant workers had shifted back to their villages or towns.

III. Road to Recovery

Actions by state governments will play a critical role in determining how well small retailers are able to recover. A rapid recovery will require cohesion and collaboration between governments at centre and state. With this in mind a five-step recovery process is suggested in our report.

The first steps are aimed at building trust and confidence in the policy-making process. We suggest that governments at various levels engage with different stakeholders to understand their concerns. Authorities should frame rules on the basis of feedback obtained in such consultation, and the principles of non-discrimination and non-arbitrariness. This will facilitate a level playing field that allows retail market participants to leverage their strengths and explore synergies between the digital and traditional channels.

Authorities must also review the crisis management playbook, including the legislative framework, keeping in mind lessons from the pandemic. A framework governing e-retail, or e-commerce more broadly, can take inspiration from the sectoral development bodies in Malaysia and Singapore, which have enabled local businesses to scale and compete globally.

Attribution: Dr. Megha Patnaik and Mohit Chawdhry. “E-Retail, Consumer Demand and the Road to Recovery,” Report No. 004, September 2020, Esya Centre.

Non-Personal Data: Policy and Regulatory Considerations

The past year saw significant developments in India’s data protection landscape. The Personal Data Protection Bill (PDP Bill) was introduced in Parliament in December 2019, and is under consideration by a Joint Parliamentary Committee. It aims to set out the governance framework for personal data and establish a Data Protection Authority for the purpose. Non-personal data, which does not relate to the data of identified individuals, remains outside the ambit of the PDP Bill. The Union Ministry of Information and Technology (MeitY) also constituted a committee under the chairmanship of Kris Gopalakrishnan (Committee) to suggest pathways for the regulation of Non- Personal Data (NPD). In this introductory brief we introduce the concept of NPD, trace related developments, and suggest the contours of subsequent research.

Attribution: Mohit Chawdhry, “Non-Personal Data: Policy and Regulatory Considerations,” Policy Brief No. 202, May 2020, Esya Centre.

Response to the Consultation Whitepaper on the Strategy for National Open Digital Ecosystems (Node)

We at the Esya Centre greatly appreciate the opportunity given to us by the Ministry of Electronics and Information Technology (MEITy) to respond to the consultation whitepaper on the ‘Strategy for National Open Digital Ecosystems (NODE)’ (Whitepaper), which solicits public comments for developing a comprehensive national strategy on NODE. We appreciate that MEITy has identified design principles to develop a framework for digital governance through the Whitepaper, and that it has also identified key concerns that would need to be accounted for in developing the NODE framework. In answering the questions posed in the Whitepaper, we have focused our feedback on those relating to design principles, governance, and the potential risks of open digital ecosystems. We have approached this analysis from a broad, techno-legal perspective, and focusing on the rights and obligations of various stakeholders. Part I of this response will provide a brief snapshot of our recommendations under the relevant questions, which will thereafter be explored in detail in Part II. We hope that these discussions will prove instructive in a larger discourse about digital governance in India.

Comments on the: Personal Data Protection Bill (PDP Bill), 2019

The copyrightability of databases has been settled by the Supreme Court in Eastern Book Company v. DB Modak. Here, the question was whether the petitioner, a company which created databases of Supreme Court cases (which are in the public domain) could claim copyright protection for their databases. It was held by the Court that the petitioner’s input of independent skill, labour and capital, in editing and arranging the information as well as adding inferences from it in the form of headnotes, resulted in the database being a copyrightable work.

Response to the Draft Information Technology [Intermediary Guidelines (Amendment) Rules], 2018

We at the Esya Centre, greatly appreciate the opportunity given to us by the Ministry of Electronics and Information Technology (MEITy) to respond to the draft ‘Information Technology [Intermediary Guidelines (Amendment) Rules], 2018’ (“Draft Rules”), which seek to replace the rules notified in 2011. We appreciate that MEITy has undertaken to reform and clarify issues on Internet governance through these rules. However, after a thorough analysis of these rules, we believe a more holistic understanding of evolving technologies, and global trends in Internet governance may be instructive for MEITy to take this discussion forward. As such, we have approached this analysis from a broad, technological perspective, highlighting the major thematic areas under each proposed rule, rooting our arguments in broader discourses on internet governance and the attendant rights and obligations of stakeholders. Therefore, Part I of this response will provide a brief snapshot of some of the proposed Rules, and how they can be revised to comply with prior legislative jurisprudence, and best practices. Part II will delve into a more detailed discussion on the broader principles of regulatory governance. We hope that these thematic discussions will prove instructive in a larger discourse about the growing Internet ecosystem in India.