We should join WTO e-commerce talks
Mains Paper 3: Economy
Prelims level: WTO members
Mains level: WTO e-commerce talks
• E-commerce and growing protectionism were two key topics of discussions at
the G20 ministerial meeting at Tsukuba, Japan, on June 8 and 9.
• New Delhi will soon have to take a decision on whether or not to join the
WTO’s plurilateral group on trade rules in e-commerce.
• Earlier this year, 77 WTO member-countries came together to negotiate trade
rules in e-commerce.
• India is negotiating an e-commerce chapter in the Regional Comprehensive
Economic Partnership (RCEP) agreement.
• Among the 16 RCEP member-countries, 11 (including China) are a part of the
plurilateral group. It is, therefore, important for the new government to review
• In the past decade, fast growth of technology and development of different
business models have led to double-digit growth of trade in e-commerce.
• UNCTAD estimated that the global e-commerce market was at $29 trillion in
• India was ranked ninth in terms of global e-commerce sales then.
• The flow of data now contributes more to the world’s GDP than flow of
• The rise in importance of data and its intangibility have made the
regulatory framework governing data flows complex.
• While it is increasingly difficult for countries to regulate technology,
there are concerns that growing digitalisation may increase the risks to
national security and consumer privacy.
• To enforce government right to vigilance and consumer data protection, a
number of developed and developing countries are implementing data localisation
Concerns for WTO member countries
• The European Union (EU) has implemented the General Data Protection
Regulation (GDPR), while China’s Cybersecurity Law of 2016 prohibits or severely
restricts routine cross-border transfers of information.
• India’s Draft National E-commerce policy is aimed at enacting a data
protection regulation based on the Srikrishna Committee recommendations.
• Two concerns of WTO member-countries are localisation and the growing
oligopolistic powers of few global multinationals.
• The plurilateral group created by the WTO member countries is negotiating
global trade rules in e-commerce.
• To understand whether India should be a part of the plurilateral group, a
survey of 50 stakeholders was conducted by researchers in ICRIER.
• Majority of the respondents opined that India should participate in the
plurilateral e-commerce negotiations so as to play a major role in
• Most Indian business and export promotion councils feel that taking a hard
position of staying out of the negotiations can adversely impact India’ trade
relations with key export markets such as the US.
• Some survey participants felt that the disincentive to participate may be
due to the lack of data and information and/or lack of preparedness.
• In this context, the government may start sponsoring research for data
collection on what component of the SME businesses are through e-commerce
platform, whether such platforms have helped SMEs to access the global market
and integrate into global value chains, and what is the business model of the
e-commerce companies and their source of funding, among others.
• They also suggested that India should enact the Personal Data Protection
Bill based on the Srikrishna report to ensure data security.
Key highlights from this survey
• The survey also found that barriers which adversely impact efficient
business models and restrict investment in logistics infrastructure but are not
able to help the domestic companies to gain global scale should be reviewed and
replaced by policies which address the issues faced by domestic start-ups and
• A number of e-commerce companies and their express delivery service
providers pointed out that commitments to deliver within a certain date and/or
time cannot be made to customers unless e-commerce companies and/or the express
delivery companies in their network have control over the inventory.
• The restrictions on FDI in inventory-based model cannot be adhered to if a
firm, on the one hand, has an efficient business operation which meets customer
requirements and satisfaction and, on the other, has a fast-track growth
• Indian express delivery companies pointed out that being a part of the
network of global e-commerce companies have led to 40 per cent increase in their
B2C sales and 20 per cent increase in their B2B sales. Given that GST supports a
single market model, if the restrictions on inventory-based models are removed,
they can be a part of the most efficient inventory management system, which will
reduce logistics costs.
• While all survey participants agree on the need for data security and
protection, they have raised concerns about the way in which the policy have
been implemented and, at times, without stakeholders’ consultations.
• The RBI said that the entire data relating to payment systems should be
stored in a system “only” in India.
• While the payment companies had no objection to share the data real-time
with the RBI, they are concerned about their ability to do risk management and
fraud in the context of international trade-related payments if data
mirroring/sharing is not allowed.
• Localisation of data has been a key component of the Draft National
E-commerce Policy, but the policy fails to define key terminology like community
data and sensitive data.
• Lawyers are also divided as to what are the constitutional rights of
citizens in a democratic country and how that is ensured under the proposed
• While the policy is drawn with the objective of creating infrastructure and
jobs in the country, there are no studies on how much infrastructure is needed,
do we have the capacity to manufacture to meet the requirements, can we meet the
requirements in three years as proposed, and what would be the impact on trade
balance and imports.
• Given these policy gaps, the high-level trade committee may review the
current regime, look at global best practices.
• To examine the inputs given by different stakeholders and then develop
India’s e-commerce policies and negotiating strategies at the WTO.
Q.1) Consider the following statements:
1. Article 85 (2) (b) of the Constitution of India provides the Speaker with
the power to dissolve Lok Sabha.
2. Article 83(2) of the Constitution provides for a normal term of five years
for the Lok Sabha.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Q.1) Why India should join WTO e-commerce talks?