India’s Information Technology Act hinders the development of e-commerce

Electronic commerce – conducting business through network technology – is no longer confined to developed nations. Countries like India, with its hugely skilled labour force, have exceptional opportunities to benefit from e-commerce. However India’s 2000 Information Technology Act is over-complex and risks hindering the development of e-commerce in India.

Research from Queen’s University Belfast and Liverpool John Moore University reviews India’s Information Technology Act, 2000 and its replicability. Arguing that the legislation has an over-complex set of provisions that will hinder the development of e-commerce, the authors suggest ways to overcome the obstacles preventing developing counties from realising the potential of e-commerce.

India hopes to win 12 per cent of the anticipated global market for IT-enabled services of US$142 billion by 2008. Over a fifth of Fortune 500 companies are already out-sourcing software development to Indian companies. Although India is not currently among the top 15 internet-using nations (due to the fact that only around five million people own personal computers) the usage rate is growing faster than anywhere else in the world – spurred by the use of cable television (now available to 37 million Indians) to facilitate internet access. E-commerce however is still limited: worth only $255.3 million in 2001 – around a third of that in Hong Kong.

Traditional legal rules assume the existence of paper records, documents, signatures, physical cash, cheques and face-to-face meetings. As more transactions are carried out by electronic means however, it becomes important that such transactions are legally binding. India’s Information Technology Act 2000 provides a legal framework so that electronic transactions are not denied legal effect, validity or enforceability.

Though the Act was one of the first pieces of Indian legislation to be thrown open for public comment, it is over-complex. The authors show how it:

• deals competently with India’s domestic legal issues but nation-states adopting similar law might find unilateral enforcement of e-commerce-related rules difficult
• departs from similar legislation elsewhere by seeking to regulate the internet by making publication of obscene information in electronic form an offence
• is potentially ambiguous on whether an electronic contract is concluded when the acceptance is dispatched from the sender or when the acceptance is actually received by the offeror: this could pose practical problems in the real world of communication where timing is often critical
• departs from the looser European Union model of registration and operation of Certification Authorities (CAs) – those who issue digital signatures confirming the identity of senders – which allows certification-service-providers to provide their services without prior authorisation
• has tied India to one form of technology and to a cumbersome registration system
• prevents a large number of digital certificate owners abroad from using them for transactions in India.

Implications for law-makers in developing countries suggest they should:

• emulate the more minimalist approaches adopted in other jurisdictions rather than adopt India’s prescriptive approach
• not make India’s mistake of shaping regulations as if all contracts are likely to be between parties within the geographical boundaries of the country
• be open to the real possibility that registration systems will change as suppliers and consumers move to other authentication procedures based around biometric systems.

Source(s):
‘E-commerce and the law: a  review of India’s Information Technology Act, 2000’ by Subhajit Basu and Richard Jones, Contemporary South Asia, 12(1), pp7-24, March 2003

id21 Research Highlight: 22 March 2004

Further Information:
Subhajit Basu
School of Law
Queen’s University Belfast
29 University Square
Belfast BT7 1NN
Northern Ireland

Tel: +44 (0) 28 9027 3467
Fax: +44 (0) 28 9027 3376
Contact the contributor: Subhajitbasu@hotmail.com

Queen's University, Belfast

Contact the contributor: s.basu@qub.ac.uk

Richard Jones
School of Law
Liverpool John Moores University
Josephine Butler House
1 Myrtle Street
Liverpool L7 4DN

Tel: +44 (0) 151 231 3931
Fax: +44 (0) 151 231 3935
Contact the contributor: R.P.JONES@livjm.ac.uk

Liverpool John Moores University, UK

Other related links:
Global Internet Policy Initiative

dot-Gov: Policy and Regulation - DOT-COM Alliance

'The Management of e-commerce'

'E-Commerce and Development Report 2003' >

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