India rethinks which digital giants should face advance competition rules

A government-commissioned market study is testing the proposed Digital Competition Bill’s thresholds, covered services and impact on start-ups and MSMEs before ministers decide how far ex-ante regulation should reach.

India’s Ministry of Corporate Affairs is pressing ahead with evidence gathering before it decides the shape of its proposed Digital Competition Bill, a sign that the government is still weighing how far ex-ante regulation should reach into the country’s digital economy. According to a market study request obtained by MediaNama through an RTI reply dated October 9, the ministry wants a clear assessment of which companies should be designated as systemically significant digital enterprises, how those firms should be identified, and whether the law should cover a narrower or broader set of digital services.

The study sits within a longer policy process that began with the draft bill published in March 2024, which proposed advance obligations for large platforms rather than waiting for enforcement after anti-competitive harm had occurred. The ministry invited public comments in early 2024, then returned to the subject through office memoranda in 2025 and 2026, both of which framed the exercise as a way to develop a “balanced, proportionate, and forward-looking” framework. Those memoranda also made clear that the government sees the policy problem as one involving market power, structural dominance, interoperability and fairness, while remaining cautious about compliance costs for Indian firms, start-ups and MSMEs, as well as the Competition Commission of India’s capacity.

A central question in the study is whether the draft bill’s thresholds are fit for purpose in a market that has moved quickly since the original proposal. The request asks the research agency to test the qualitative and quantitative criteria in Clause 3, estimate how many companies would be captured if those thresholds were changed, and consider alternative or supplementary metrics drawn from international practice. That focus reflects earlier criticism that the designation framework could pull Indian firms into the regime too early, as well as a parliamentary committee’s call for a more careful designation process, including the possibility of an exceptional challenge mechanism for companies contesting their status.

The same scrutiny applies to the bill’s list of core digital services. The draft identifies nine such services, but the ministry wants the agency to judge whether that list remains adequate or should be expanded or narrowed in light of present market conditions. The terms of reference require an assessment of market structure, major players, growth patterns, competitive pressures and barriers to entry across the covered sectors. That question has gained urgency after the parliamentary Standing Committee on Finance urged the government in August 2026 to finalise the bill and extend its scope to virtual assistants and cloud services, although the market study itself does not direct the researchers to endorse that expansion.

The study is also designed to look beyond the largest platforms and test how the proposed regime would affect smaller firms. The ministry wants evidence on likely consequences for competition, entry and innovation, including the position of start-ups and MSMEs. At the same time, it has asked for a comparison with regulatory approaches in other jurisdictions, suggesting that New Delhi is still open to lessons from abroad rather than committed to a single model. Separate analysis of India’s wider digital governance framework shows that this debate is unfolding alongside major reforms to data protection, intermediary rules and online gaming, which makes the competition bill part of a broader, and still unfinished, effort to build the rules of India’s digital economy.

The contract for the study was awarded to the Management Development Institute Society, Gurugram, on May 18, 2026, for Rs 1.19 crore. The agreement envisages literature review, stakeholder consultations, data analysis and both interim and final reports, with the ministry’s memorandum setting out a staged timetable. On August 3, 2026, the government told Parliament that the review work had been completed and consultations had begun, and that the final report was expected in October. But the ministry’s RTI reply did not confirm whether that report had been submitted, and it declined to provide further detail on progress or timing, saying no information was available with the Competition Section.