Startups call for higher thresholds in ex ante regulations under Draft Digital Competition Bill

Emerging startups have reportedly urged the parliamentary panel to raise thresholds for the ex ante (preventative) regulations under the Draft Digital Competition Bill. The companies have urged that the same should be increased in a manner that protects the domestic startups and innovation.

The draft bill introduces ex-ante regulations targeting 'Systemically Significant Digital Enterprises' (SSDEs), defined by dual qualitative and quantitative thresholds— global turnover, Indian revenue, user numbers, and business user counts— to curb market dominance.

Read more: Parliamentary panel to discuss Competition Commission's role in digital landscape

Indian startups argue current thresholds (Rs 4,000 crore domestic turnover or $30 billion global, plus 10 million end users or 10,000 business users) may inadvertently capture mid-sized, homegrown firms, risking stifled innovation.

The startups have also asked the parliamentary panel reviewing the CCI’s role in the digital economy to raise both financial and user thresholds, ensuring only real “gatekeepers” are regulated, thus safeguarding room for domestic digital innovation.

Read more: MeitY report on Digital Competition Bill awaited; stakeholders demand startups, MSMEs exemption

The Parliamentary Standing Committee on Finance recently held a key meeting to examine the evolving role of the Competition Commission of India (CCI), with a particular focus on the digital economy.

The committee delved into a range of competition-related concerns, including those emerging in the fast-growing quick commerce sector. The meeting comes at a time when the Corporate Affairs Ministry is reviewing stakeholder feedback on the proposed Digital Competition Bill, which aims to address anti-competitive practices in the digital space.

Read more: Industry endorses withdrawal of draft Digital Competition Bill

It is to be noted that a parliamentary standing committee recently directed the CCI to submit its responses on the steps taken to safeguard the interest of small retailers. The committee also sought inputs from the CCI on the proposed Digital Competition Bill and solutions to address the issues related to anti-competitive practices.

The Ministry of Corporate Affairs (MCA) has received over 100 suggestions on the draft Digital Competition Bill (DCB) during the public consultation period from March 12 to May 15, 2024. The Ministry is currently reviewing the stakeholder feedback to refine the Bill. Additionally, the Ministry of Electronics and Information Technology (MeitY) conducted its own consultations in June last year and is awaiting further inputs, particularly concerning the inclusion of ex-ante provisions aimed at pre-emptively regulating dominant digital platforms.

Experts tell Storyboard18 that given the complexity of regulating large digital entities without hindering innovation, extensive inter-ministerial consultations are planned and hence the delay. The finalisation of the DCB is likely in the latter half of the FY26. The draft is currently under review after industry consultations.