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India proposes new e-commerce rules with a focus on data-rules

NEW DELHI/MUMBAI (Reuters) – India sketched out a design for a new policy for the fast-growing e-commerce sector on Saturday, with the emphasis on data localization, improved privacy safeguards and measures to combat the sale of counterfeit products.

FILE PHOTO: The logo of India’s e-commerce company Flipkart is seen in this illustration photo January 29, 2019. REUTERS/Danish Siddiqui/File Photo

The proposed revision, which would likely be the increase of the operational costs for the industry, comes two months after the country changed the status of foreign direct investment in e-commerce.

That forced retail giants Amazon.com Inc and Walmart-owned Flipkart the restructuring of their activities in india, and the latest reforms spell further unrest.

“In the future, economic activity is likely to follow data,” the widely expected draft policy paper said. “Therefore, it is essential that we retain the control of the data on job creation in India”.

The new rules call for the housing of more data centers and server farms locally, amid a wider push for the data of the localization of the South Asian country, and that is one of the fastest growing online market.

The indian central bank in 2018 forced payments providers such as Mastercard and Visa Inc on storing Indian users’ data locally.

“Steps will be taken to develop capacity for data storage in India,” the design of the e-commerce rules said. “A period of three years would be given to the industry to adapt to the storage of data required.”

Flipkart and Amazon said they were going by the draft rules and share the inputs with the government.

The proposed rules also call for the creation of a “legal and technological framework” that can help in the imposition of restrictions on the cross-border flow of data generated by the users, moves that could affect not only e-commerce platforms, but also social media companies such as Alphabet, Inc Google-rival Facebook Inc.

India is also planning to mandate all e-commerce companies to provide access to their data stored abroad if official requests are made. The rules, which come at a time of New Delhi is working on a broader data privacy law, also prohibit companies from sharing data that is stored in the overseas with other companies, even with the consent of the user.

Other proposals are required all e-commerce websites or apps that are active in India have a locally registered company, and the increase of the liability of e-commerce players to ensure the products sold on their platforms are not of counterfeiting and piracy.

“Many of the issues covered, bold decisions,” the All India Online Sellers Association represents more than 3,500 online merchants, said in a tweet.

New Delhi has invited comments on the proposed rules by March 9, after which the rules are likely to be formalized.

Reporting by Aditya Kalra and Sankalp Phartiyal; Editing by Euan Rocha

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