Need to keep watch on data usage to prevent creation of unprecedented market power: Niti Aayog

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Data is critical for e-commerce and there is a need to keep close watch on its usage to prevent creation of “unprecedented market power”, and it should not be controlled by a central authority as that could kill all trade and commerce, a senior Niti Aayog official said.

The underlying comparative advantage and strength of the fast growing e-commerce sector comes from data, Niti Aayog Vice-Chairman Rajiv Kumar said.

“Data is something which we need to be carefully looking at as to how this is going to be used by people who are in e-commerce because as access to data, access to much bigger data when combined through the modern technologies can give immense power, not just to these individuals, (but) we can get directed in our lives, and our taste and preferences will be changed if they use this data,” he said.

Kumar was speaking at a workshop of Competition Commission of India (CCI) on e-commerce. He said CCI and other authorities that are looking into cyber issues can look at ways to bring a balanced situation “where data is not used to create unprecedented market power”.

“This is a very nuanced situation. Very clearly, you can not have a situation where data is controlled by any central authority that will kill all trade and commerce and advances and progress. So, you have to have a situation where you permit data to be available, to be accessible.

“I am not sure how you will do it. But I think it is something which we need to work very closely with the industry and other stakeholders, because they are the ones who are be using it,” Kumar added. He said that a light touch of regulation is much better than a hammer approach towards a relationship.

Talking about the foreign investment regime in the e-commerce sector, Kumar said he always advocates and talks about liberal FDI regime in retail trade and even in e-commerce.

“This industry is going to be critical….Our retail trade is not matching up needs of the 21st century. In new India, retail sector should be technology driven and modern,” he said.

Further, he said the CCI have to look at the degree of cross-subsidisation to be permitted in the sector because there could be a situation where “you cross-subsidies from one business to other that become predatory”.

Kumar also said that a big problem can arise if an e-commerce player combine its business with its own brick and mortar facilities or shops, which can be very large. “Now that could be a situation where you can control a very large segment of economy and create monopolies, and anti-competitive sort of situation and I think we should be aware of that,” he said.

Impact of a conglomerate controlling media, e-commerce, and other large business on “our lives” could be something a “cause of concern” and “I think we should be aware of that going forward” as it could give an unprecedented market power, Kumar added. He also noted that the e-commerce sector is growing at a fast pace and it would provide enough space for small retailers too.

“The market is large enough for both e-commerce and so called mom and pop stores and small retailers,” he said, adding “e-commerce does not mean reincarnation of East India company in this country”.

E-commerce is the future and it is a sun rise sector when it is combined with the growth of the internet and artificial intelligence, he said. Currently, the market size of the industry is about USD 40-42 billion, which is estimated to touch USD 200 billion by 2026.

“There is a huge space and opportunity here. Therefore, it is for us to grab this opportunity and make sure that we are ahead of the curve,” he said, adding the role of policymaker is to facilitate this growth in a manner that it would be beneficial to the seller, buyer and consumer.

He also hoped that the standoff between restaurants and food delivery aggregators will reach an equilibrium and both sides will agree that they can benefit from each other.

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