INTRODUCTION
E commerce or electronic commerce is described as the sale and acquisition of products and services through internet as the medium through the many sites on the internet. Electronic commerce refers to extension of the business market and keeping the interaction with the customers by using telecommunication networks [1]
To make the framework under which businesses operate stricter, the government has proposed amendments to the Consumer Protection Act’s e-commerce requirements. While some of the new provisions are similar to what the Centre sought from social media companies in the IT intermediary rules announced earlier this year, several proposals in the e-commerce rules are aimed at increasing online retailers’ liability for goods and services purchased on their platforms.
CHANGES FOR E-COMMERCE COMPANIES
India’s new e-commerce policy came into effect on February 1, 2019. A new set of policy rules had been formed for the e-commerce companies. DIPP gave them a 60-day window period for aligning themselves to the government’s modified foreign direct investment (FDI) rules.
To begin with, the Consumer Affairs Ministry’s draught guidelines aim to prohibit e-commerce companies from conducting “special flash deals.” While traditional e-commerce flash sales are not prohibited, particular flash sales or back-to-back offers which limit customer choice, raise costs and impede a fair playing field are not permitted, according to the draught regulations.
The regulations also establish the idea of “fall-back liability,” which states that e-commerce companies would be held responsible if a seller on their platform fails to provide products or services due to negligent behaviour, resulting in a consumer loss. When difficulties develop with items purchased on their marketplaces, e-commerce platforms frequently send customers to the appropriate vendors to resolve any issues. Consumers will be able to contact the platform directly with fall-back liability.
The regulations also seek to prohibit e-commerce businesses from “manipulating search results or search indexes,” in response to a long-standing demand from sellers and dealers for equal treatment across platforms. E-commerce businesses would also be prohibited from disclosing personal information about customers to anybody without their clear and affirmative agreement. Companies would be required to offer indigenous alternatives to imported items, bolstering the government’s drive for made-in-India products. The proposed amendment also calls for e-commerce companies to be required to join the National Consumer Helpline. Any online store must first register with the Department of Industrial and Internal Trade Promotion (DPIIT).
The proposed regulations would make it illegal for a marketplace e-commerce entity’s logistics service provider to treat sellers in the same category differently. Any entity having 10 percent or more common ultimate beneficial ownership will be considered an “associated enterprise” of an e-commerce platform. A leaked draft of India’s new e-commerce policy wants a new e-commerce regulator that has access to source code and algorithms to mitigate biases, wants access to non-personal data for law enforcement and taxation purposes, country of origin labels, and much more. The document, shared with MediaNama by two industry sources, carves out huge mandates for e-commerce companies to share non-personal data with the government and muddies waters related to data localisation, mirroring, and storage even further.[2]
KEY HIGHLIGHTS OF THE NEW POLICY
Bar online retailers from selling products through vendors in which they have an equity interest. Also bars them from entering into exclusive deals with brands for selling products only on their platforms. All online retailers will be required to maintain a level playing field for all the vendors selling their products on the platform, and it shall not affect the sale prices of goods in any manner. Disallows e-commerce players to control the inventory of the vendors. Any such ownership over the inventory will convert it into the inventory-based model from a marketplace-based model, which is not entitled to FDI.
Under the new rules, the e-commerce retailer shall be deemed to own the inventory of a vendor if over 25 percent of the purchases of such a vendor are through it.
Restricts marketplaces from influencing prices in a bid to curb deep discounting. With this, special offers like cashback, extended warranties, faster deliveries to some brands will be prohibited, with the view to provide a level playing field.[3]
ISSUES IN THE NEW E-COM POLICY
The new restrictions are likely to have a broad influence in an e-commerce sector that India expects to be worth $200 billion by 2026, with companies ranging from Tata’s Big Basket to Reliance Industries’ JioMart and Softbank-backed Snapdeal to market giants Amazon and Flipkart. The regulations are the latest in a developing spat between American digital behemoths and New Delhi over a slew of policy concerns that some regard as protectionist.
The rules are the latest in a long-running spat between American tech giants and New Delhi over a range of policy issues that some see as protectionist. If the regulations are enforced, non-compliance could result in jail time and fines of at least 25,000 Indian rupees under India’s consumer legislation. The regulations might be a greater blow for Flipkart and Amazon since they include stipulations requiring e-commerce companies to guarantee that none of their associated businesses are featured as vendors on their shopping platforms and that no affiliated company should sell products to an online seller using its platform.
The ideas are expected to be met with opposition from Amazon and Flipkart. Some in the sector saw the regulations as a government alternative to a more rigorous version of the country’s foreign investment law, which limits the kind of commercial relationships Flipkart and Amazon may have with vendors, according to the individuals.
In a statement, Amazon said that online markets encourage competition and openness, but that it was still evaluating the draught policy and that it was too early to comment. A request for a response from Flipkart was not returned. A request for a response from Flipkart was not returned.
In February, a Reuter’s investigation quoted Amazon records showing the corporation offered preferential treatment to a tiny number of its vendors and used them to circumvent federal law, prompting demands for a ban. Amazon has said that no vendor receives preferential treatment.
The Department for Promotion of Industry and Internal Trade (DPIIT) will soon release a widely accepted draught e-commerce policy, while a revised draught would establish principles for the use of data for industrial development in areas where such norms do not yet exist, as well as safeguards to prevent data misuse and access by unauthorized parties.
Author’s Name: Shreeya Wahal (NMIMS Bangalore)
[1]‘E-Commerce in India’ (UKEssays.com, June 2021) https://www.ukessays.com/essays/marketing/ecommerce-and-internet-marketing-in-india-marketing-essay.php?vref=1 accessed 30 June 2021
[2]Agrawal BA, “India’s New Draft e-Commerce Policy Focuses on Data, Competition, Counterfeiting, Consumer Protection” (MediaNamaDecember 15, 2020) https://www.medianama.com/2020/07/223-second-draft-ecommerce-policy-india/ accessed June 26, 2021
[3]Insights IAS, “New e-Commerce Policy Comes into Effect” https://www.insightsonindia.com/2019/02/02/new-e-commerce-policy-comes-into-effect accessed June 26, 2021
