New rules belabour e-commerce

No comparable regulatory burden on brick&mortar; rules likely to further bind e-com players in red tape

Analysts at Goldman Sachs estimate Indian e-commerce to reach 2 billion in GMV (gross merchandise value) by FY25, growing at a 29% CAGR over FY20-25.
Analysts at Goldman Sachs estimate Indian e-commerce to reach $112 billion in GMV (gross merchandise value) by FY25, growing at a 29% CAGR over FY20-25.

One could be forgiven for thinking the fresh set of draft rules for the e-commerce sector has been drafted by the department for promotion of industry and internal trade (DPIIT) and not the consumer affairs ministry, given many of the clauses have more to do with the platforms and the sellers rather than consumers. But even if these were the DPIIT’s rules, they are way too complicated, and in the absence of specifics, leave room for a lot of debate and litigation. Indeed, so clumsily are these drafted, they would trip up even the most careful and conscientious of businesses.

If the objective is to empower the bureaucrats even more than they already are, and leave businessmen rattled, these guidelines will achieve that. But even before any endeavour to study these, it is hard to recall such detailed guidelines having been drawn up for the brick&mortar retailers. After all, for any business, the rules need to be fair and equitable across segments. More important, if one is working to protect the rights and interests of consumers—which is what this is meant to be about—it is only fair there should a similar set of rules and regulations for brick&mortar stores.

The draft rules seem to apply to all hues of e-commerce players; experts are yet unsure whether the logistics companies are also governed by these. Above all, they are trying to unscramble the many clauses that deal with related parties. Pending a detailed study of the changes to the Consumer Protection (E-Commerce) Rules, 2020, experts fear these will further entangle e-commerce companies in red tape.

The government has attempted to reassure the sector with an additional secretary in the consumer affairs ministry saying on Tuesday that the ministry “will not regulate” the trade on e-commerce platforms and that the e-commerce players need not be anxious about the proposed changes in the rules. Unfortunately, the industry is unconvinced; it believes the rules are being put in place because the government wants more control.

The additional secretary said that the government would not seek disclosures on flash sales and would allow discount sales which benefit consumers—but not “fraudulent flash” ones. The point is that sales and discounts are always good for the consumer, so where is the need for any discussion on flash sales? Also, if a specified set of sellers wants to sell goods on a platforms, at a certain price, do customers not gain?

After all, single-brand brick&mortar players do organise sales; moreover, even in multi-brand stores, select brands do offer discounts from time to time. Even kiranas give preferential treatment to vendors. Restrictive rules should not be applied to one set of players in the industry. There is also a clause on cross-selling, which the industry believes, can be used to harass players. Whether it is the rules on the liability of a marketplace or on private labels, the objective seems to be to limit the operations of the sector. To be sure, e-commerce platforms need to be transparent on the use of consumer-data. The world over, the authorities are attempting to rein in the dominance of BigTech.

But, sadly, these guidelines will impact small e-commerce entities and the thousands of MSMEs who are benefiting from the marketplaces. The government seems to be missing this point altogether. It is ironic that in a year in which the e-commerce industry has been of so much use to households and is creating thousands of jobs and attracting foreign capital, the government wants to put more impediments in its way.

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First published on: 23-06-2021 at 05:10 IST