Implications of IT Bill for e-commerce
Any e-commerce transaction on the net basically involves three crucial steps:
i. Finalising the terms of a sale on the net
ii. Effecting payments for the deal
iii. Delivering the goods
All the above activities ( i and ii in all cases and iii for some products) are done electronically. Therefore, without the IT Act in place, if there is a dispute between the parties involved in a deal, there is no physical paper/ evidence supporting the deal. So, presently, the trading parties have to perforce resort to one of the following alternatives:
i. Confine the deals to only well-known corporate customers
ii. Back up the deals with cumbersome paper-based agreements/ documents
iii. Restrict themselves to small value trades
iv. Take disputes to courts; expend time, energy and money to test the legal waters.
This situation is, therefore, a big disincentive for the rapid growth of the e-commerce sector. Consequently, big e-commerce deals have largely been confined to the B2B segment - and a growing disillusionment with B2C prospects.
But, now IT Act (It has since received presidential assent) has:
given legal recognition to accounting records maintained electronically and
laid down the framework for ensuring authenticity, integrity and non-repudiation of electronic transactions.
The Act is, therefore, widely expected give a large impetus to e-commerce activities. In particular, a lot of hope is now pinned on the B2C segment. Thus, assuming that the Act will come into force before August 2000, NASSCOM has projected that the e-commerce volume during the rest of the financial year would jump to at least Rs. 2000 crores (i.e. up 5 times from the current levels of a little less than Rs. 500 crores).
Incidentally, recently the US House of Representatives has approved a bill that will allow consumers and businesses to sign checks, loan applications and contracts electronically. Such electronically approved documents will be treated on par with their paper-based counterparts. The bill is expected to be passed by the Senate and approved by the US president in due course. The IT Act in India, in its present form, does not provide for such a facility. Providing such a facility will help in ensuring that business deals can be struck electronically.