Regulation on its way

The spectacular entry of the American retail giant Wallmart into the battered e-commerce Unicorn flip chart made a wider Indian public once again aware of the great upheaval in which the country's retail landscape is undergoing. 

The internet as a distribution channel for goods and services of all kinds is growing explosively and many questions important for consumers and companies are unresolved, or poorly organized. At the same time, pressure is increasing due to the interests of domestic and international entrepreneurs and investors. With the Wallmart transaction it seems that two US giants batteling against each other on Indian ground and Chineses Alibaba observing from the sidelines, waiting how and when they should enter the stage with more than just their payment vehicle PayTM. 

The Indian government therefore already announced a regulatory initiative at the turn of 2017/2018, the main features of which can now be seen in a first concept paper. 

Accordingly, all issues surrounding the subject are to be regulated by a single body, which is in principle a good idea, because up to now associated legal and tax issues, consumer protection and investment guidelines have been scattered and regulated in such a non-transparent manner that even Indian experts easily lost track. 

This superordinate e-commerce regulator will then ensure that customer data is stored in India, establish and control rules for online marketplaces to ensure that Indian suppliers are favoured, and prevent foreign goods from flooding the Indian market. The same regulator is to regulate and monitor discounting and give preference to Indian founders and management teams and ensure that Indian digital payment systems are used.

Many of the measures outlined are understandable in so far as they address actual market maladministration. On the other hand, it is difficult to imagine that complex business issues such as pricing strategies can be monitored and influenced by an authority in a timely manner. In functioning ecosystems, there is a wide variety of forms of entrepreneurial activity and initiatives, and ultimately only those business models that are of benefit to all market participants prevail: For consumers, dealers and manufacturers. 

In a perfect system, government agencies do not have to intervene at all, or only in a very abstract way. The framework for e-commerce under discussion crosses this - from our point of view a reasonable boundary - in many areas. And we fear that in the end there was a good intention, but the Indian market will be closed off, competition will be restricted and consumers will be restricted rather than protected. 

We feel encouraged with this concern when looking at other similar initiatives. Thus, demonetization in 2015 was led by the understandable motivation to limit the black economy. In the end, however, it was a badly designed and poorly implemented action that did much more harm than good. The introduction of the single excise duty (GST) has also been so poorly implemented that there is still complete helplessness in many areas. 

Both issues that have massively weakened Internet trade in recent years and despite the official telling did nothing good for consumers, or the counrty. We hope that the government has learned its lessons from these experiences and that the planned e-commerce framework will work better. 

We believe in Indian entrepreneurs, who are intelligent and strong enough to build businesses, which are good for their customers and do not need guidelines much more then restrictions. We understand that small business owners need to be supportet to be able to compete with international giants, but we believe that such support should not be come as restrictions for their international competition, but rather as encouraging support for the business owners. 

Just some thoughts. Let's see how it develops further. 

Translated with www.DeepL.com/Translator