Law and Practice
1. Digital Economy
1.1 Key Challenges
The primary areas of legislation applicable to the digital economy in India include data protection, consumer protection, and the regulatory framework for digital payments. In recent years, India’s antitrust regulator has also increased scrutiny in the digital economy space.
The Digital Personal Data Protection Act 2023 (DPDPA), which is expected to come into force in 2025, will apply to all entities – whether Indian or foreign – that process personal data in India or target Indian data subjects for goods or services.
The Information Technology Act 2000 (IT Act) is India’s primary legislation governing the use of computer resources. Provisions related to cybercrimes, such as identity theft, cheating and misrepresentation, as well as breaches of contract, are relevant to the digital economy.
Consumer protection laws also play a role in the digital economy, as discussed under relevant sections. Entities involved in payment systems must comply with regulations issued by the Reserve Bank of India (RBI). The Payment and Settlement Systems Act 2007 (PSS Act) is the primary legislation for payment systems, requiring RBI approval for any payment system operating in India. The RBI issues regulations that payment systems must follow, along with guidelines like those for payment aggregators and payment gateways, credit card and debit card issuance, and card transaction tokenisation. These guidelines vary depending on the nature of the business.
Large e-commerce entities, such as Amazon and Flipkart, have been under heightened scrutiny by India’s antitrust regulator, the Competition Commission of India (CCI). In 2020, the CCI initiated an investigation into the two platforms for alleged violations of the Competition Act, 2002. Both companies challenged the probe in court, and the matter remains pending. The outcome of this investigation, including any penalties or corrective actions, will depend on the court’s decision. In 2024, the CCI also imposed a fine on Meta for violations of the Competition Act.
