advances in IT and its prominent role in commerce leads Financial Institutions
towards E-commerce. In this work we
have defined E-commerce and tried to identify the driving forces for the
phenomenal growth of E-commerce globally. We
also discuss critical issues for E-commerce in the country and the role banks
can play. We also present
initiatives taken by the Government and activities carried out by RBI and IDRBT
in this direction.
“Electronic Commerce” is a buzz word in all the trade, industry and
government fora the world over. Some believe it is a mere hype created by some
interested parties, while most of the others believe it is a genuine phenomenon
which is drastically redefining not only the parameters of Technology and Trade
as we know them, but also the very basis of our thinking and the way we lead our
life. The Phenomenon of Electronic Commerce has permeated into every aspect of
our life today.
Commerce has been around for the last two decades in some form or the other, but
the new force that is driving Electronic Commerce is the Internet, which is
revolutionizing the way companies around the globe conduct business. Internet
based electronic commerce is playing a critical role in addressing strategic,
mission critical business needs of the companies and hence the companies are
making it an integral part of their business strategies.
to a survey conducted by Nasscom, E-commerce transactions in the country would
grow phenomenally to Rs. 2500 crore in 2000-01 and to Rs. 10,000 crore in
2001-02. Globally, according to a
survey conducted by IDC, currently the electronic commerce over the Internet is
some $26 billion, while it is expected to reach about $1 trillion by 2003-05.
mind boggling, figures are sufficient for any sane individual, even vaguely
connected to industry, trade or commerce, to understand the potentially radical
influence that E-commerce is having on human society.
this is due to the Internet, a simple network of networks of computers across
the globe, linked through various means: cable, satellite, telephone lines etc.
based on the TCP/IP protocol. This network has not only altered the way we
conduct trade and commerce, but also fundamentally altered the way we
communicate, the way we live and to some extent, the way we think.
this work, we shall briefly look at:
Definition of electronic commerce ,
Drivers of electronic commerce,
Critical issues for electronic commerce,
Role of banks in electronic commerce and
IDRBT’s activities in the arena of electronic commerce.
DEFINITION OF ELECTRONIC COMMERCE
put, E-commerce is buying and selling on electronic networks, predominantly the
Internet. This could involve trade of tangible goods/services similar to
traditional commerce, or intangible items like music, information and involving
digital transfer etc.
World Trade Organization (WTO) distinguishes six main instruments of electronic
Electronic payment and money transfer systems,
Electronic Data Interchange, and
- The Internet
the telephone, fax, TV and EDI have been in existence for some time, but when
people talk of E-commerce, they usually refer to Internet Business, wherein
goods or services are traded on the net.
there are two types of electronic commerce –
Business to Business electronic commerce (B2B), and
Business to Consumer electronic commerce (B2C)
E-commerce is today about 80% of total E-commerce in the world, due to its
reduced transaction costs,
improved product quality,
minimal investment for global reach,
reduced inventory costs etc.
or retail E-commerce is nowhere near B2B in terms of size but it is growing
phenomenally as far as volumes are concerned. More and more people are taking to
shopping on the Internet due to the following factors:
better prices, etc.
some societies where the information infrastructure is well developed, like the
US and some countries of South East Asia, B2C is a way of life. In other areas
where the information infrastructure is not fully developed, including most
areas of Europe, Asia (except UK and the Nordic countries like Sweden, Finland
etc.) and the entire African and South American continents, B2C E-commerce is
yet to take off in a big way, though small beginnings have been made.
DRIVERS OF E-COMMERCE
following broad themes have been identified as the driving forces for the
phenomenal growth of E-commerce globally:
Commerce is easy and affordable: E-commerce
is easy and Internet access is relatively affordable. A PC, modem, browser, and
a phone line are all that is needed to log on. Moreover, Internet technologies
are also user-friendly. Point-and-click technology makes for easy use of
browsers and search engines, and websites themselves are generally easy to enter
Commerce transforms the market place:
E-commerce will change the way business is conducted; traditional intermediary
functions will be replaced, new products and markets will be developed, new and
far closer relationships will be created between business and consumers. It will
change the organization of work; new channels of knowledge diffusion and human
interactivity in the workplace will give more flexibility. Adaptability will be
needed with worker’s functions redefined and skills upgraded.
Commerce has a catalytic effect:
E-commerce will serve to accelerate and diffuse more widely, changes that are
already under way in the economy, such as the reform of regulations, the
establishment of electronic links between businesses, the globalization of the
economy, and the demand for higher skilled workers. Likewise, many sectoral
trends already underway, such as electronic banking, direct booking of travel,
and one-to-one marketing, will be accelerated.
customer service: With enhanced
customer service in mind, companies are turning to the internet as a way not
only to lower costs but also to increase service quality levels. Internet based
communication is seen as a way to strengthen business relationships with
suppliers and customers, especially in B-2-B E-commerce.
commerce over the Internet vastly increases interactivity in the economy: These
linkages now extend upto small businesses and households and reach out to the
world at large. Access will shift away from the relatively expensive personal
computers to cheap and easy to use TVs and telephone devices. People will
increasingly have the ability to communicate and transact business anywhere,
anytime. This will have a profound impact on the erosion of economic and
value chain management: Improved value
chain management efforts have sparked a need for collaborative sharing of
information about the supply and demand chains of enterprises and their commerce
is the underlying technical and philosophical tenet of the expansion of
E-commerce: The widespread adoption of
the Internet as a platform for business is due to its non-proprietary standards
and open nature as well as to the huge industry that has evolved to support it.
The economic power that stems from joining a huge network will help to ensure
that new standards will remain open. What is more important, is that openness
has emerged as a strategy, with many of the most successful E-commerce ventures
granting business partners and consumers unparalleled access to their inner
workings, databases, and personnel. This has led to a shift in the role of the
consumers, who are increasingly implicated as partners in product design and
creation. An expectation of openness is building on the part of the
consumers/citizens, which will cause transformations, for better (increased
transparency and competition), or for worse (potential invasion of privacy).
commerce alters the relative importance of time: Many
of the routines that help to define the “look and feel” of the economy and
the society are a function of time. Mass production is the fastest way of
production at the lowest cost. E-commerce is reducing the importance of time by
speeding up production cycles, allowing firms to operate in close co-ordination
and enabling consumers to conduct transactions around the clock. As the role of
time changes, so will the structure of business and social activities, causing
potentially large impacts.
commerce eXtended ERP: Several
companies and institutions have installed ERP in their organizations.
Substantial sums have been spent in this direction, and they are eager to
leverage these huge investments. ERP is a driving force because it provides
opportunity to improve efficiency by integrating diverse applications.
“Strategic Focus Report on Retail Banking”, a publication on Banking
Technology, considers factors that must be looked at, for banks interested in
E-commerce. It suggests that apart from building an impressive website, issues
such as staff training to ensure that at minimum, staff are more technically
literate than the average e-Customer, down to the fact that every piece of
marketing literature the bank has ever produced should carry its web address. In terms of technology, the report finds that future
technologies such as digital TV and smart cards represent an unforeseeable and
thus open-ended commitment.
trend is towards enabling transactions online, and this will accelerate.
Transactional systems should link directly to consumer data systems. E-commerce
is all about leveraging the Internet throughout the entire value chain from the
customer to the final inter-bank transfers etc.
Thus it is a visible expression of the bank’s ability to offer leading
edge service. Although for many banks, an E-commerce operation is currently a
net cost center, but the time is not far ahead when it will become a net profit
CRITICAL ISSUES FOR E-COMMERCE
are issues, which are critical for E-commerce to develop. Although there are
significant areas of overlap, they can be divided into three groups: financial
issues, legal issues and market access issues.
customs and taxation
uniform commercial code
intellectual property protection
Customs and Taxation: Internet
lacks the clear and fixed geographic lines of transit that historically have
characterized the physical trade of goods. Thus, while it remains possible to
administer tariffs for products ordered over the Internet but ultimately
delivered via surface or air transport, the structure of the Internet makes it
difficult to do so when the product or service is delivered electronically.
Nevertheless, many nations are looking for new sources of revenue, and may seek
to levy tariffs on global electronic commerce.
present taxation laws, based either on business connection or permanent
establishment are difficult to apply as the physical location of given
transactions looses its importance, making it difficult to determine their
revenue jurisdiction. Furthermore,
E-commerce through the Internet, by and large, results in a distinct change in
the pattern of intermediation by banks and other institutions, limiting the
ability of authorities to rely on them to collect withholding tax.
could be source-based or destination based. While source-based taxes applied to
E-commerce have clear compliance and administrative cost advantages over
destination-based counterparts, problems of evasion still remain. Special types
of taxation such as the “bit-tax” on data transmission have been proposed.
However, tax administration would need to strike a balance between maximizing
the potential “efficiency gains” out of technology and protecting the
Indian context, there has been no real effort to spell out a clear-cut taxation
policy. Though the WTO has ruled that there cannot be additional taxation on
E-commerce till 2001, this issue needs to be resolved for a healthy growth of
E-commerce. Countries like the US are arguing for a tax less Internet economy,
but other countries like Australia, India, etc. would like to impose some tariff
on electronic commerce. They argue that as most of the Internet traffic is
routed through the US, it has an unfair share of the revenues.
Electronic Payment Systems: New
technology has made it possible to pay for goods and services over the Internet.
Some of the methods would link existing electronic banking and payment systems,
including credit and debit card networks, with new retail interfaces via the
Internet. Electronic money, based
on stored-value, smart card, or other technologies, is also under development.
Substantial private sector investment and competition is spurring an intense
period of innovation that should benefit consumers and businesses wishing to
engage in global electronic commerce.
this early stage in the development of electronic payment systems, when the
environment is changing rapidly, it would be hard to develop policy that is both
timely and appropriate. For these reasons, inflexible and highly prescriptive
regulations and rules in the banking and financial sectors are inappropriate and
incompetent. Rather, in the near term, case-by-case monitoring of electronic
payment experiments is preferred.
electronic payment systems develop, governments should work closely with the
private sector to inform policy development, and ensure that governmental
activities flexibly accommodate the needs of the emerging marketplace.
Vasudevan Committee on the Technological Upgradation of the Banking Sector
recommended that “ ---the RBI may promote amendment to the RBI Act 1934, and
assume the regulatory and supervisory powers on payment and settlement systems.
Simultaneously, the RBI may promote a new legislation on Electronic Funds
Transfer (EFT), to facilitate multiple payment systems, to be set up for banks
and financial institutions.”
proposed IT Act deals with this, wherein, in the Reserve Bank of India Act,
1934, after Chapter IIIC, the Chapter III D -of the IT Act 1999 is to be
inserted, to deal with electronic fund transfer systems. Notification of
Regulation for Electronic Fund Transfer System is done under Section 58 of
Reserve Bank of India Act, 1934 (2 of 1934).
Uniform Commercial Code: In
general, parties involved should be able to do business with each other on the
Internet under whatever terms and conditions they agree upon.
encourage electronic commerce, the governments should support the development of
both a domestic and global uniform commercial legal framework that recognizes,
facilitates, and enforces electronic transactions worldwide. Fully informed
buyers and sellers could voluntarily agree to form a contract subject to this
uniform legal framework, just as parties currently choose the body of law that
will be used to interpret their contract.
expansion of global electronic commerce also depends upon the participants’
ability to achieve a reasonable degree of certainty regarding their exposure to
liability for any damage or injury that might result from their actions.
Inconsistent local laws, coupled with uncertainties regarding jurisdiction,
could substantially increase litigation and create unnecessary costs that
ultimately will be born by consumers. All countries should work closely with
other nations to clarify applicable jurisdictional rules and to generally favor
and enforce contract provisions that allow parties to select substantive rules
the development of global electronic commerce provides an opportunity to create
legal rules that allow business and consumers to take advantage of new
technology to streamline and automate functions now accomplished manually.
the Indian context, the current Indian laws require a quick change. It is high
time that we change the vintage Telegraph act of 1885, so that the Indian people
and telecom companies can freely breathe the electronic air. It is also
essential to introduce laws against computer crimes and such other cyber laws
that would help to build the Information Infrastructure of the country. The laws
should also consider the emerging use of Electronic Data Interchange (EDI),
Electronic Commerce, Electronic Funds Transfer, Electronic Cash, Copyright and
Digital Intellectual Property rights etc. For example, one may require changing
the Evidence Act to recognize Digital signatures. Changes in Evidence Act, 1872;
Indian Penal Code 1860; and Indian Patents Act General Clauses/Act should be
undertaken to recognize emerging technologies, keeping in view the following:
of computer crimes
Signatures especially as related to Electronic Funds Transfer
and Digital Intellectual Property Rights especially with regard to Internet and
World Wide Web
of Land Records
of all consumer goods and related amendments in the Weights and Measures Act
IT Act 1999 seeks to address some of these issues, related especially to cyber
crimes and digital signatures, but several issues are still left un-addressed.
activities like E-commerce, digital economy, spread of Internet, new laws to be
created at WTO could have wider impact on our economy. India needs to understand
these laws quickly, create national debates and get favorable response at WTO.
The Services component of the IT industry is a strong area of skill in the
context of demonstrated Indian competency. This is a subject of intense debate
in the GATS forum and hence suitable laws and practices need to be put in place
so as to maximize benefits for Indian skills and avoid pitfalls in International
policy matters on the issue.
Intellectual Property Protection: Commerce
on the Internet often will involve the sale and licensing of intellectual
property. To promote this commerce, sellers must know that their intellectual
property will not be stolen and buyers must know that they are obtaining
agreements that establish clear and effective copyright, patent, and trademark
protection are therefore necessary to prevent piracy and fraud. While
technology, such as encryption, can help to combat piracy, an adequate and
effective legal framework is also necessary to deter fraud and theft of
intellectual property, and to provide effective legal recourse when these crimes
occur. Increased public education about intellectual property in the information
age will also contribute to the successful implementation and growth of the
Global Information Infrastructure.
India, the IPR Cell in MIT (earlier DOE) is a facilitator for creation,
ownership and protection of IPR in Electronics & Information Technology.
This IPR Cell has initiated a project on development of Electronic Copyright
Management System for Indian environment. Market oriented consensus based
approach is being followed so that the developed technology meets the
requirements. Accordingly a feasibility study report is being prepared in the
first phase, before taking up the development in the second phase.
Privacy concerns are being raised in many countries around the world, and some
countries have enacted laws, implemented industry self-regulation, or instituted
administrative solutions designed to safeguard their citizens' privacy.
Disparate policies could emerge that might disrupt trans-border data flows. To
ensure that differing privacy policies around the world do not impede the flow
of data on the Internet, trading partners and policymakers from various
countries should discuss and try to build support for industry-developed
solutions to privacy problems.
GII (Global Information Infrastructure) facilitates the collection, re-use, and
instantaneous transmissions of information.
If this is not managed carefully, it can diminish personal privacy and
people may feel uncomfortable doing business in the networked environment.
Commerce on the GII will thrive only if the privacy rights of individuals
are balanced with the benefits associated with the free flow of information.
Technology will offer solutions to many privacy concerns in the online
environment, including the appropriate use of anonymity. The goal is to find a
way to balance the competing values of personal privacy and the free flow of
information in a digital democratic society.
scenario in the country is in the development stage. Few organizations
particularly in the defense sector are engaged exclusively for the development
of cryptography techniques, protocols and the products to enable privacy and
security. IDRBT is also working on solutions required by the Banking and
Financial Sector of the country.
of Telecommunications does not permit the encrypted signal on their network and
this is one of the reasons why extensive development in this area has not taken
place. Secondly, the cryptographic products worldwide are licensed items and the
license to the country is not easily available for products of key length of
more than 56 bits. Indian industry largely assembles PCs and therefore the
cryptographic product has been limited to the PC market whereas higher end
systems are not produced in the country and therefore the progress of the work
in this direction is slow, as the know-how of the system is generally not
Market Access Issues
Telecommunications Infrastructure and Information Technology: Global
electronic commerce depends upon a modern, seamless, global telecommunications
network and upon the computers and information appliances that connect to it.
Unfortunately, in many countries including ours, telecommunications policies are
hindering the development of advanced digital networks. Customers find that
telecommunications services often are too expensive, bandwidth is limited, and
services for mission and time critical applications are unavailable or
unreliable. Likewise, many countries maintain trade barriers for imported
information technology, making it hard for both merchants and customers to
purchase the computers and information systems they need to participate in
are various constraints in the present network that may impede the evolution of
services requiring higher bandwidth. The goal should be to ensure that online
service providers can reach end-users on reasonable and nondiscriminatory terms
and conditions. Genuine market opening will lead to increased competition,
improved telecommunications infrastructures, more customer choice, lower prices
and increased and improved services.
issue is the extent to which the relative complexity of getting on, and using,
the Internet acts as a deterrent to many consumers.
A critical and frequently underestimated factor in consumer purchasing
decisions is "ease of buying". Currently, the buying interface over
the Internet is discouraging to most consumers.
The interface metrics of a TV style device (turn it on and change
channels) are easier to use as compared to existing computers.
important interface aspect is that the Internet's reliance on representation
(both visual and auditory) of goods and services offered for sale is somewhat
similar to mail order catalogue shopping. While such shopping has significant
advantages for sellers, in reduction of transport and storage costs at possibly
high-rent locations, the benefits for buyers are much less marked.
simple terms, bandwidth is the carrying capacity of a network, or how much data
can be transferred in a given time. The importance of bandwidth is that it
determines the extent to which Internet delivery
of digital products is feasible. Immediate delivery via the Internet may be more
attractive to consumers than deferred delivery via the ordinary mail system. In
addition, certain kinds of entertainment, which appeal to consumers, rely on
issues to be considered for bandwidth are: -
Local loops pricing,
Attaching equipment to the network,
Multimedia over Internet.
addition, countries have different levels of telecommunications infrastructure,
which may hinder the global provision and use of some Internet-based services.
has also recognized this agent of Technological Change as a key source of
industrial competitiveness and economic growth. It has realized that in times to
come, progress in information technology would have the greatest influence on
the global economy, making it possible to collect, process and transmit
information at lightning speed at lesser cost, thereby increasing productivity,
returns on capital, quality and efficiency in all sectors of the economy. The
Indian IT industry would be worth at least US $ 120 billion by the year 2010,
which could include a US $ 80 billion of software industry and US $ 40 billion
of other IT industry.
order to achieve the above target, thrust should be accorded to many areas
including development of infrastructure, manpower development, education,
software exports, employment, low-cost computers, chip manufacturing, internet
proliferation, new legislation and quick response to convergence of
last few years have witnessed a large amount of liberalization in government
procedures and policies. This has attracted a large number of companies from
overseas as well as India to set up operations in country. However, growth and
development of infrastructure has not kept pace with the growth of the industry
and for this every Indian state should have its own Silicon Valley. Such a move
would require policy motivation as well as creation of Silicon infrastructure
around the existing and new universities and development of international and
domestic air links. This essentially means that a Software Super-Corridor be set
up across the country and for this IT would need to be declared as an
Infrastructure Industry, with focus on:
designing of IT infrastructure:
proliferation and development of India as major internet hub
the broadest possible free flow of information across international borders is
essential. This includes most informational material now accessible and
transmitted through the Internet, including World Wide Web pages, news and other
information services, virtual shopping malls, and entertainment features, such
as audio, video products, and the arts. This principle extends to information
created by commercial enterprises as well as by schools, libraries, governments
and other nonprofit entities.
order to realize the commercial and cultural potential of the Internet,
consumers must have confidence that the goods and services offered are fairly
represented, that they will get what they pay for, and that recourse or redress
will be available if they do not. This is an area where government’s
appropriate action is required.
most important aspect is Internet content development in the country. i.e. to
bring Internet traffic to Indian web sites which are focussed on our culture,
heritage etc. This can be of immense use to spread the message of our culture
and heritage to Indians and others all over the world. Therefore, policy
initiative should be taken for the proliferation of Internet and development of
Indian content in the INTERNET while ensuring adequate regulation on the type of
Technical Standards: Standards
are critical to the long-term commercial success of the Internet as they not
only allow products and services from different vendors to work together, but
also encourage competition and reduce uncertainty in the global marketplace.
Premature standardization, however, can "lock in" outdated technology.
Standards can also be employed as de facto non-tariff trade barriers, to
"lock out" non-indigenous businesses from a particular national
ensure the growth of global electronic commerce over the Internet, standards
will be needed to assure reliability, interoperability, ease of use and
scalability in areas such as:
(confidentiality, authentication, data integrity, access control,
services infrastructure (e.g., public key certificate authorities);
copyright management systems;
network technologies (e.g., Asynchronous Transfer Mode, Synchronous Digital Hierarchy); and
object and data interchange.
the current context, countries like USA and EU create standards for E-commerce,
which developing countries like India have to respond. It is important for India
to develop our own standards in line with our business models yet compatible
with international standards.
the above issues highlighted- are critical to have an effective framework for
electronic commerce to thrive. The success of electronic commerce will require
an effective partnership between the private and public sectors avoiding the
contradictions and confusions that can sometimes arise when different agencies
individually operate without coordination.
is a great opportunity for commercial activity on the Internet. If the private
sector and governments act in close coordination, this opportunity can be
realized for the benefit of all people, bringing India out from its perpetual
state of hibernation- as a nation that always had the potential to rise up but
never did - to a well-developed country, which can effectively take care of all
sections of people residing in it.
Internet users do not have confidence that their communications and data are
safe from unauthorized access or modification, they will be unlikely to use the
Internet on a routine basis for commerce. So the requirements are:
secure and reliable telecommunications networks;
effective means for protecting the information systems attached to those
effective means for authenticating and ensuring confidentiality of
electronic information to protect data from unauthorized use; and
users who understand how to protect their systems and their data.
is no single "magic" technology or technique that can ensure security
and reliability. Accomplishing that goal requires a range of technologies
(encryption, authentication, password controls, firewalls, etc.) and effective,
consistent use of those technologies, all supported globally by trustworthy key
and security management infrastructures.
beginning has been made in the use Electronic Commerce (EC) and Electronic Data
Interchange (EDI) by a number of agencies in the country. The EC and EDI would
involve communication of information pertaining to trade, finance and would
result in transaction between private and public sector, in both domestic and
international communities. It is expected that by the turn of the century, there
will be significant growth in the use of EDI both in the country and around the
world. The success and growth of EC and EDI, however, would depend upon how the
issues concerning legal (such as tampering with data, message etc.), security
and performance of hardware, software and communication are resolved. Therefore,
as dependence on computer technology grows in the country, it is important to
plan for security, examine the issues and promote crime prevention programs on a
national level. As mentioned earlier, adequate laws in this regard need to be
framed and enacted.
is to be enacted that would facilitate development of voluntary key management
infrastructures and would govern the release of recovery information to law
enforcement officials pursuant to lawful authority.
addition to use of laws as a preventive measure, it is necessary to develop
concepts/guidelines and manuals for computer security and implement the
guidelines in a serious manner at all levels and within different types of
entities and organizations. Such guidelines/manuals are fundamentally important
and hold greater prospects of success than to enact new laws for protection.
ROLE OF BANKS IN ELECTRONIC COMMERCE
banking is one of the truly widespread avatars of E-commerce the world over. One
of the benefits of e-banking is that it allows the customers to deal with
monetary transactions without being physically present at the bank.
are three modes of e-banking:
Internet Banking – transferring transactions on the internet,
Smart cards – where Internet banking is taken further with a swipe of
the smart card taking care of security in the transactions and eliminating
of the world’s leading banks are investing heavily in e-banking services.
Citibank is considered to be the leader in e-banking. But, globally, as per a
survey conducted by Ernst & Young (www.ey.uk)
many banks are also blindly investing huge sums with no clear justification for
India, though several banks have ATM facility, only four banks have e-banking
facility: ICICI Bank, CitiBank, IndusInd Bank, and Times Bank. However, others
like Global Trust Bank and IDBI Bank are quickly setting up the required
facilities. They offer a range of services including ATM, Debit cards, fund
transfers etc. through electronic channels.
need to buck up and absorb the technology fast as estimates go, about 20-30
cents per dollar of E-commerce transactions are income to banks. Going by
Nasscom’s estimates of E-commerce in India, this would mean about Rs. 3000
crore of income for banks by 2001-02.
IDRBT’S ACTIVITIES IN THE ARENA OF E-COMMERCE
capable and fully automated banking infrastructure is an absolute requirement
for healthy E-commerce. Among the various other technological needs of the
Banking and Financial sector, this was one of the goals for which IDRBT was set
up by the Reserve Bank of India -- to act as a think tank for the Promotion of
Technology solutions. The Institute has already undertaken several research
projects in the area of Computer Based Training, Digital Certificate Management,
Data Mining, Analysis of Credit Card Transactions etc.
is also going on various aspects related to E-commerce.
The Institute is working on a sponsored project from Ministry of
Information Technology, along with CMC Limited on “Technologies for
E-commerce”. Under this project, IDRBT will procure and develop various tools
that will enable quicker building of E-commerce applications in the country. The
project envisages creation of a test bed for Internet security and Internet
commerce. By developing tools, building prototypes and field implementing
applications the test bed will be used for E-commerce.
is in the process of establishing a “Center of Secure Technologies”. This
center will study the existing Public Key Infrastructure and procure/develop
necessary software tools. It will help in setting up Public Key Infrastructure.
The center will also take up Research & Development and Consultancy on
Security Systems, Security Standards and Electronic Payment Systems specific to
the Indian environment, and will also assist in investigation of Cyber crimes.
was also involved in a project with IITB, Mumbai and other Institutions, to
develop a SMART card solution that can be used in India. The outcome of this
pilot project is smart card standards, which has been submitted to RBI for
consideration as national standard. This Project is of great importance because
Security Validation and Authentication will become easy once this Card is
operational. Since individual computers are expected to have Smart card readers
in the near future, this opens a vast range of opportunities to the Banking and
the post liberalization era, competition and changes in technology and
lifestyles have changed the face of banking but we in India have a long way to
go, before it can claim its rightful place in the world. On its part, the
government has taken many good 'first steps' in setting up the IT Task Force,
the Group on Telecom (GoT) and various committees to look into different IT
related issues. A draft New Telecom Policy 1999 (NTP-99) was put up on the
Internet for discussion in January 1999. The Union Cabinet subsequently approved
this on March 26, 1999. There is also a lot of interaction with the Indian
Diaspora in the West, to find 'India specific' solutions in merging and
exploiting information and its related technologies into the mainstream of life
in India. With traditional branch
based banking on the decline in major metros on one side, and banking yet to
reach some remote corners of the country still, banks have an unprecedented
diversity in the challenge to provide better service to maximum number of
people. Electronic commerce is a delivery channel that can help banks to
overcome several limitations in terms of “Reach” and “Range” of
significant than the value of the actual transactions, is the value of the
savings and alternate modes of earnings spawned by the Internet. Also
significant is the rapid rate at which these alternate avenues are growing.
is on the threshold of an information revolution. It is well poised to be an
economic superpower in the 21st century due to the availability of top notch
talent in Information Technology, a thriving democracy with minimum censorship
on the use of information and communication technologies and the widespread use
of the English language. There is a view that, 'Information Technology is to
India, what oil is to the Gulf'.
are 122 ISP license holders in India offering more than 2,50,000 Internet
connection, and an estimated 20,00,000 people have access to the Internet.
government has finally liberalised the ISP Policy. There is negligible
censorship on the Internet and an abundance of top-notch talent in India.
VSNL has also commissioned a larger bandwidth for Internet services in
India and has started leasing lines to private ISPs.
order to build confidence of the common man, in electronic commerce transactions
over the net it is necessary to have a legal framework supporting Digital
transactions, in place. Without these safeguards, transactions over the Net are
not secure. It is heartening to note that the Indian parliament is working on
passing these cyber laws. Once cyber laws are in place and business over the Net
takes off, India will be in an excellent position to be an Asian Internet
important steps need to be taken if India is to make full use of the
opportunities thrown up by the information revolution. Information
infrastructure needs to be put in place, cyber laws which will legalize the
transaction of money over the Internet need to be enacted and information
security needs to be ensured to guard against the negative effects of the
information revolution. Efforts have to be made to ensure optimum utilization of
information technologies and to encourage financial institutions, multinational
corporations and entrepreneurs to put their money in building this information
infrastructure and resolving all pending disputes like the sharing of the
frequency spectrum, the license fee tangle etc.
electronic commerce environment in India is clouded. There are a lot of players
claiming to be into E-commerce and several others waiting in the wings. Till the
early 90's , we in India had been cribbing about the closed economy. But the
initial kick-start in the early 90’s has managed to keep the economic reforms
going till date. The Internet Connectivity and Electronic commerce scenario is
somewhat similar. There is a plethora of problems and difficulties and a host of
issues that still need to be addressed and once the Government takes a clear and
well defined stand, then things will fall in place.
Policy makers, Government, and Public Sector entities like the DoT and VSNL have
yet to really take the leap forward – to integrate our economy with the
digital economy. However, on the other extreme are working examples that prove
that things can be done – and done well, if desired.
Indian Customs Department has taken a pioneering step towards electronic
commerce in International trade. Indian Customs EDI System (ICES) was the name
given to the project. It is a system to integrate EDI applications into the
customs procedures and bring in an environment of participation and co-operation
of all the agencies and partners who have a role to play in the international
movement of goods, containers and passengers.
The other agencies involved in the customs clearance through NICNET value added networks are:
Directorate General of Foreign Trade (DGFT); for processing import/export
Banks; for introducing EDI into normal Banking transactions like Duty
International Airport Authority of India;
Apparel Export Promotion Agency and other Quota agencies;
Container Corporation of India,
Other trade related agencies like ECGC etc.
ICES has been extended since January 1997 to twenty nine centers. By the end of
the year 2000, it is proposed to start EDI operations at all major
ports/airports/inland container depots and land customs stations, recognizing
the importance of electronic commerce, due to its cost effectiveness.
supporting framework in terms of Laws, Regulations and Policies is sorely
inadequate. But the IT Bill –1999 is a comprehensive step in this direction;
once the Bill is cleared by the Parliament, we have a Cyber law framework in
place. This is expected to give E-commerce in India a much needed boost.
relevant Acts like The Indian Evidence Act, the Indian Penal Code, Customs Act,
The Banker’s Book Evidence Act, etc. will have to be amended. The Ministry of
Commerce had set up an expert group to examine the commercial laws and to draft
E-commerce Laws. The RBI has also set up an expert committee (The Shere
Committee) to study the legal issues related to the introduction of EFT in our
country. It has recommended both short and long-term measures taking into
account the legal and technology position of India. The recommendations include:
Introduction of EFT through the regulations to be made by the Central
Board of the Reserve Bank u/s 58 of the RBI Act, 1934.
The model customer contract, which will govern the banker – customer
relationship in regard to EFT.
Amendment of the RBI Act by introduction of a separate chapter dealing
with EFT systems and power to RBI to draft necessary regulations.
Enactment of the EFT Act.
Amendment to the Banker’s Book Evidence Act. 1891.
- rather the lack of it - is a
major bottleneck. The Telecom policy –1999 and the recent ISP Policy are major
steps towards meeting the needs of the required National Information
Infrastructure (NII) for E-commerce.
with an open, absorptive and dynamic e-enabled Banking sector, a proactive
government and appropriate initiatives from various industry players, India can
soon acquire its rightful place in the global E-commerce scenario.
Frontiers of electronic commerce: Ravi Kalakota and Andrew B Whinston,
Addison Wesley Longman Inc.
RBI Annual report: 1998-99
Banking Technology, September 1999.
Report on Trends and Progress of Banking in India, RBI: 1998-99.
Report of the Committee on the Technological Upgradation in the Banking
Sector; RBI, July 1999.
Electronic Commerce in India: A Macro level Feasibility Study:
M.V.S.Prasad and Sushmita Patra
EC World,10 major trends for EC on the Internet: Rich Waters, July 1999.
NetCom’99 International Seminar on E-commerce, October 1999.
WTO Report on Electronic Commerce and Role of WTO
E-commerce; Implementing Global Marketing Strategies, CTRC
E Commerce World Magazine – 1998-1999 issues.
E-Commerce- The Cutting Edge of Business … Kamlesh K Bajaj &