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India need not rush toward ex-ante regulation of digital economy

Due to its peculiar ‘increasing returns to scale’ economics, sticky market power, and inability to render timely remedy by competition authorities, the digital economy worldwide is receiving considerable attention. While the European Union (EU) has notified Digital Services Act (DSA) and Digital Markets Act (DMA), other jurisdictions, such as the United States (US), Australia, South Africa, the United Kingdom (UK), are contemplating additional regulation of the digital economy and big players in it. There are lessons from this for India, which need to be examined.

In its 53rd Report in 2022, the Parliamentary Standing Committee (PSC) of Finance, India recommended the enactment of the Digital Competition Act (DCA) on the lines of the EU’s DMA. Following the PSC recommendation, the Corporate Affairs Ministry constituted a committee to draft a bill. As per media reports, the committee is likely to publish a draft bill soon.

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