Digital Competition Bill Impact on Indian Startups: Opportunities and Challenges

By Sunil Sonkar
2 Min Read
Digital Competition Bill Impact on Indian Startups: Opportunities and Challenges

India’s trillion-dollar digital economy is undergoing major transformation. The primary reasons are widespread smartphone use, affordable data, a talented youth population and of course a dynamic startup ecosystem. As an aftermath, the country is ranked third globally. The digital infrastructure here includes the India Stack and effective digital gateways. This has become a magnet for global tech giants.

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The growth digital economy is a testament to the investments and benefits brought by big tech giants. There is also a need of regulatory measures to curb anti-competitive practices and simultaneously foster a level playing field for startups and small businesses.

Competition Commission of India (CCI) has been the regulator since 2009, but it lately seems that the existing laws needed updating. Amendments were introduced in 2023 with new measures like settlements, commitments and deal value thresholds. Parliamentary Standing Committee on Finance recommended a clearer and better path to regulations and thereafter Draft Digital Competition Bill was proposed. It basically aims to address some of the specific challenges posed by big tech companies in the digital markets.

Often the big tech companies engage in preferential pricing, deep discounting, data monopolization and other such practices. This can stifle competition. The companies leverage vast amounts of data and network effects. They establish themselves as gatekeepers of the digital ecosystem. Hence, the growth of homegrown tech is hampered.

The Draft Digital Competition Bill aims to tackle such anti-competitive behaviors. It proposes identifying companies providing Core Digital Services (CDS) as Systematically Significant Digital Enterprises (SSDEs). The criteria to identify will be based on finance and user base. A company would be classified as an SSDE if it has more than one crore (10 million) users in India. India has a vast digital market of more than 820 million internet users.

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