Trade bodies to discuss amendments to e-commerce rules this week

E-commerce firms have begun deliberations on the new amendments proposed by the consumer affairs ministry on the Consumer Protection (E-commerce) Rules, 2020, as firms and trade bodies look to submit recommendations to the government by 6 July.

Major industry bodies, including Internet and Mobile Association of India (IAMAI), Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce & Industry (Ficci) and National Association of Software and Service Companies (Nasscom) are expected to hold meetings with e-commerce firms and other stakeholders this week, according to three people aware of the discussions.

The Associated Chambers of Commerce and Industry of India (Assocham) has asked stakeholders to submit their suggestions by 29 June, said one of the people cited above.

The new amendments have come as a surprise to e-commerce firms, which weren’t expecting the department of consumer affairs to lay down specific practices governing their operations, two senior e-commerce executives told Mint, requesting anonymity.

This comes at a time when the Department for Promotion of Industry and Internal Trade (DPIIT) is also mulling a new e-commerce policy to strengthen governance on counterfeit products and focus on consumer data, a government official said in February.

“Our rules are limited to safeguarding the interest of consumers that also incorporate safeguards against unfair trade practices. But we are not into regulating the trade as such, because that is a part of DPIIT. So, DPITT is already bringing in their e-commerce policy and I’m sure they would be addressing many things which nationally we cannot address,” said Nidhi Khare, additional secretary, ministry of consumer affairs, food & distribution, at a press conference on Tuesday.

Khare said the decision to update the rules is a function of the evolution of online marketplaces, which today own private labels and services.

CII, Nasscom, Assocham and Flipkart didn’t respond to Mint’s queries until press time. An Amazon spokesperson said it is too early to comment.

As multiple government ministries begin framing rules for the $38 billion Indian e-commerce industry, addressing regulatory bottlenecks and ambiguities may be the overriding concernfor e-commerce firms, according to several industry executives Mint spoke to.

“While only 3-4% of overall retail, one cannot deny the large-scale impact e-commerce has on consumers. It is imperative that the government looks to remove ambiguities which can arise from multiple ministries governing the sector and appoint a single nodal agency and streamline rules for online marketplaces,” said Ankur Pahwa, partner and national leader, e-commerce and consumer internet, EY India.

"In the Indian context, the regulatory authorities have been zealously trying to ring-fence operations of e-commerce primarily because of the sensitiveness historically associated with FDI regime," Rishi Anand, partner, DSK Legal.

While press note 2 of 2018 had prohibited e-marketplaces from direct ownership or control over seller inventory, the new proposed amendments have further detailed the government’s stance. This include tightening the rules on ‘flash sales’ for prevention of any preferential seller treatment and proposed a ban on sale of any goods from related parties of the marketplace.

“Until the government doesn’t come with final laws to govern the sector, e-tailers will continue to create more structures and build complicated supply chains to evade the current norms,” said a senior analyst who requested anonymity.

In the past, large e-tailers, including Amazon India and Flipkart, have been accused of giving preferential treatment to sellers they hold indirect stakes in.

“Offline is the dumping ground for most of the inferior quality products in Indian retail.The Consumer affairs ministry should be focused on that. What the government seems to be missing out is that e-commerce also has provided MSMEs a wider audience to sell their products. Tightening of rules for marketplaces will further discourage these MSMEs from coming online. We will be submitting our appeal to the government,” said Vinod Kumar, president of the India SME Forum.

E-commerce firms are now expecting to get clarity from the government around ‘flash sales’, its definition of ‘heavy discounting’ and liabilities which online marketplace hold for their sellers.

“The e-commerce industry continues to be affected by the ‘flip-flops’ in policy making, where every year there are a new set of rules which potentially pose existential threats to marketplaces.These practices of online marketplaces which government is set to regulate, goes unchecked for offline retail,” said an e-commerce executive who didn’t want to be named.

The Confederation of All India Traders (CAIT) has applauded the move saying that the proposed amendments will lead to more accountability from stakeholders.

“With different government ministries now trying to regulate e-commerce in the country, there should be a final balance between giving adequate independence to e-tailers, while looking to protect consumer interest,” said Atul Pandey, partner, Khaitan & Co, a corporate law firm.

tarush.b@livemint.com