New e-commerce policy may require disclosure of algorithm, enforce country-of-origin rules

The use of algorithms, which are basically a set of rules used by e-commerce platforms to offer discounts, give priorities to some products or sellers while filtering out others, has become a contentious issue due to lack of transparency.

New Delhi: India’s new e-commerce policy may require e-commerce firms like Amazon, Flipkart and others to disclose the logic and rules used by them that govern the interaction of buyers and sellers on their platform, according to a report.

Under the proposed policy, the e-commerce giants such as Amazon and Flipkart, who dominate the Indian market, and some other players such as Paytm Mall and Snapdeal and others, may have to share the algorithm used by them with the government. The use of algorithms, which are basically a set of rules used by e-commerce platforms to offer discounts, give priorities to some products or some sellers while filtering out others, has become a contentious issue due to lack of transparency.

The draft of the new e-commerce policy, which is in making for the last two years, is expected to be placed in the public domain soon.

It is eagerly awaited by the industry and other stakeholders as it deals with the contentious issues of data localisation, user privacy, discounts offered by e-commerce players, the issue of compulsory disclosure of the country-of-origin of the goods sold on their platform, among others.

According to people familiar with the matter, though no date has been fixed for the release of the draft, it is expected to be put in the public domain soon.

“One round of stakeholder consultation is yet to take place, before that the policy cannot be placed in the public domain,” a senior official told ETV Bharat.

“This round of consultation will be on the issue of the country-of-origin rules that will be incorporated in the new e-commerce policy,” said the official.

Following the death of 20 Indian soldiers in a violent face-off in Ladakh last month, the issue of country-of-origin of products imported and sold in the country has assumed urgency for Prime Minister Narendra Modi’s government, which was already trying to reduce the country’s dependence on cheap Chinese imports under its Make in India policy.

Chinese imports have already flooded Indian markets, from IT and telecom products like laptop, computers and mobile phones to soft toys and even Ganesh idols.

In fact, the massive imports from China adversely impacted India’s bilateral trade with the country as India has a trade deficit of $53.5 billion in FY 2018-19. India imported goods and services worth $70.3 billion from China (excluding Hong Kong), while its exports accounted for just $ 16.75 billion.

However, following the violent clash between the two armies last month, people’s sentiment turned against China and there was a strong call to boycott Chinese products. The Union government also banned 59 Chinese Apps, including short video maker Tiktok, due to security and privacy concerns.

In addition to settlement of the country-of-origin issue, the new e-commerce policy may also make it binding on the e-commerce players to share relevant data with the government within 72 hours of its demand.

The government would also appoint an e-commerce regulator to ensure fair play in the industry, according to a report by the news agency Bloomberg.

The report said the government may also ask the companies to disclose the logic behind the Artificial Intelligence used by them to determine any digitally induced biases on their platforms.

The new e-commerce policy may also have provisions to encourage Indian players as the market is today dominated by the US giants – Amazon and Walmart which acquired India’s e-commerce pioneer Flipkart in 2018 in a $16 billion deal.

According to a report prepared by Deloitte and Retail Association of India, the country’s e-commerce market, which has been pegged at $24 billion in 2017, is estimated to grow to $84 billion by 2021.

(Article by Krishnanand Tripathi)