‘Country of origin’ crackdown continues

Bengaluru/New Delhi: The government on Tuesday said it has issued more than 180 notices in the past year to online retailers for violating rules by failing to display the ‘country of origin tag’ on imported goods offered on their marketplaces.

The department of consumer affairs’ legal metrology office has issued 183 notices to these retailers for violating provisions pertaining to the ‘country of origin’ tag, junior minister for consumer affairs, food and public distribution Ashwini Kumar Choubey said in Parliament.

He said the Legal Metrology (Packaged Commodities) Rules, 2011, under the Legal Metrology Act, 2009, provides for mandatory declaration of ‘country of origin’ for imported products on the digital and electronic network used for e-commerce transactions. Further, the Act provides for penal provisions in case of violations and also authorizes state governments to take action, Choubey said.

In a stakeholder meeting in June 2020, the government proposed to tighten rules for e-commerce firms, mandating them to display ‘country of origin’ for products sold on their marketplaces in a bid to reduce import dependency against the backdrop of rising tensions between India and China. Subsequently, the Consumer Protection (E-Commerce) Rules, 2020, released by the consumer affairs ministry in July 2020 directed online retailers to share all relevant details including ‘country of origin’ for goods listed.

Country of origin refers to the country where the item is produced, irrespective of the point of shipping. For instance, if a Chinese-made mobile handset is shipped via Vietnam to India, the country of origin will still remain China, not Vietnam.

“E-commerce firms are still unclear of the action to be taken in case a seller is non-compliant to the rules. As per the norm, sellers are informed and they are fine with exiting the platform owing to increased compliance burden,” an industry executive said requesting anonymity.

Flipkart, Amazon India and Paytm Mall did not respond to queries. A Snapdeal spokesperson told Mint that it hasn’t received any such notices.

“The government needs to understand that it will take some time for micro and small enterprises to follow and comply with the guidelines of ‘country of origin’. Selling online also has been a learning curve for millions of MSMEs, and different retail rules for online and offline doesn’t make it easy for smaller sellers. There has to be one set of rules for both online and offline retail. Many small MSMEs don’t have the education or necessary manpower to comply with these rules,” said Vinod Kumar, president of the India SME Forum.

“Efforts should be to reduce compliance burden on MSMEs, which are trying to sell digitally,” he added.

Last October, the consumer affairs ministry had written to both Flipkart and Amazon India for not displaying the mandatory declarations of ‘country of origin’. Subsequently, an appellate authority under the legal metrology office rejected Amazon India’s application to review the fine imposed on it. The company had said the responsibility and compliance of ‘country of origin’ resides with the seller.

“The Legal Metrology Rules as well as the recently notified E-Commerce Rules 2020 prescribe the requirement for disclosure of ‘country of origin’. Such a requirement to determine and disclose ‘country of origin’ already existed under the Customs law. Therefore, it should not be difficult for e-commerce operators to adopt the same,” said Nishant Shah, partner, Economic Laws Practice, a law firm.

tarush.b@livemint.com