The document discusses whether there should be governance for e-commerce in India. It outlines the current regulatory framework covering IT acts, contract acts, consumer protection acts, and data privacy laws. It also reviews regulations in other countries like the European Union, South Korea, and the UK. The document concludes by proposing areas that could be covered under a new e-commerce law in India, including recognizing e-commerce as a business sector, limiting liability for third-party goods, and harmonizing laws around logistical services.

1. Should there be governance for e-commerce?
By
Mr. Suhaan Mukerji
Privileged & Confidential
June 22, 2013

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Potential for e-commerce in IndiaPotential for e-commerce in India

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India: Facts and figures (“Opportunity”)India: Facts and figures (“Opportunity”)
Number of young
internet users– 110
million (indicates
propensity to buy
online)
Total internet users
in India - 150 million
(only 13 % of the
population)
3,311 e-commerce
hubs; 1,267 rural
hubs

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Comparative figures around the world (“Trends”)Comparative figures around the world (“Trends”)

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Top e-commerce companies (“Players”)Top e-commerce companies (“Players”)

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Types of e-commerce models (“Options”)Types of e-commerce models (“Options”)
Business to
Business (B2B)
Buyers and sellers are both business entities, comparable to a manufacturer
supplying goods to the retailer or wholesaler. E.g. The Steel Exchange
Business to
consumer (B2C)
Online businesses selling to individual consumers.
Consumer to
consumer (C2C):
Online auction sites are an excellent example, e.g., E-bay,
Quikr etc.
M-commerce
Utility model where personal transactions (banking, bill payments,
insurance, tax returns) done electronically/telecommunication.
Other Models
Other types: Other variations such as business to employee (B2E),
Government to business (G2B) and Government to citizen (G2C), which in
essence is similar to the above mentioned types.

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What works for e-commerce in India (“Drivers”)What works for e-commerce in India (“Drivers”)
Demographic
dividend
More than 75 % of internet users in India less than 30 years indicating a
greater propensity to shop online
Access to social media promotes better communication (promotions,
advertising, influence on ‘brands'), key to driving e-commerce growth
E-commerce platforms require considerably less physical infrastructure
putting less demand on the increasingly cramped public spaces
Institutionalized banking laws facilitate safe, secure and convenient
payment transactions , increased use of e-money, greater spending
power
No shortage of human resource to establish supply chains critical to
delivery and customer satisfaction
Social media
Puts less demand
on infrastructure
Robust financial
system
Human resource
for supply chain

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Existing regulatory framework: Is it adequate?

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Current regulatory framework: IT ActCurrent regulatory framework: IT Act

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Contract Act and Sale of Goods ActContract Act and Sale of Goods Act

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Consumer ProtectionConsumer Protection

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Data privacyData privacy

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Payment systems, courier services
Payment and
Settlement
Systems Act
 Authorisation to payment system operators to facilitate
e-payment.
 Provides duties and liabilities of the system provider
operating the payment system (obligation to disclose
terms/charges of payment system, maintain
confidentiality).
Courier Imports and Exports (Electronic Declaration and
Processing) Regulations, 2010
Enables electronic filing and processing of customs
declarations with regard to import/export by courier
companies.
For domestic couriers, the regulatory ecosystem is
ambiguous with each state having separate requirements for
declarations, forms, sales tax (inbound and outbound), entry
tax etc.
Regulation of
courier services

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Taxation
Neutrality
of taxation
Residence
based
taxation
Permanent
establishment
Domestic e-
commerce
Represents a fast growing base, and falls within the
direct tax net
International e-
commerce
International
e-commerce
‘Place of effective management’ as determining factor in
ascertaining tax liability
No single rule to determine place of effective management
Provisions of the Income Tax Act and the DTAs do not
require any revision.
 A server at the disposal of an enterprise and hosting could
constitute PE, if it is kept at a fixed place for a sufficient
period of time
 High Powered committee (Ministry of Finance) on e-
commerce recommended moving beyond PE as does not
ensure certainty of tax burden and maintenance of the
existing equilibrium in sharing of tax revenues

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FDI in e-commerce

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Comparative review of e-commerce legislations

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Review of e-commerce legislations
UNCITRAL
Model Law
European
Union
 Prior disclosure by service providers (name, location, nature etc.)
 Positive obligation to enforce electronic contracts on member states
 Exclusion of liability of service providers on the principle of ‘mere conduit’
 No liability for service providers for ‘caching’ and ‘hosting’ of information
 Obligation to frame code of conduct (trade associations) to ensure compliance
 Member states obliged to facilitate out of court dispute settlement in case of
dispute between service provider and the recipient of the service
 Emphasises on providing legal recognition to e-contracts, electronic
signatures
 Rules on attribution, acknowledgement, receipt , time of dispatch of
electronic communications
 Legal admissibility and evidential weight of data messages
 IT Act 2000 substantially incorporates UNCITRAL Model Law

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Review of e-commerce legislations
Korea
Framework Act on Electronic Trade (“FAET”) and the Electronic Signature
Act
Legal recognition to online contracts
Disclosure of name, address, contact by service provider
Security and reliability is the obligation of service provider
Also regulates website content to prevent unfair competition and trade
UK
 UK E-commerce Regulations 2002 transpose the main requirements of the EC
Directive
 Emphasis on by breaking jurisdictional barriers & boosting consumer confidence
• Regulations apply to persons who advertise goods/services online, sell goods/
services online or transmit or store electronic content or provide access to a
communication network
• Obligations in respect of information an online service provider must give a
consumer
• Limitations on service providers’ liability for unlawful information they unwittingly
carry or store (mere conduit, caching, hosting etc.)

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Enhanced coverage of a new legislation

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New law on e-commerceNew law on e-commerce
E-
commerce
Platform for
emerging
technologies
Effective
communication
with the end user
Protection from
liability: web
hosting, caching Recognition of e-
commerce as a
business sector
Limitation of
liability for 3rd
party goods
Recognition of
click wrap
agreements
Mandatory
disclosure of
identity, place of
business, contact of
the seller
Determining place
of jurisdiction for
consumer
protection
Recognition of all
forms of commercial
communication
Harmonisation of
laws regulating
logistical services

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Thank you