Home / Industry / Retail /  E-commerce rules may keep logistics out

NEW DELHI : The government may keep logistics suppliers to e-commerce companies outside the definition of “related parties", conceding a major demand of online retailers who had opposed such classification.

“Recently, the CEO of a major e-commerce player met senior commerce ministry officials. He said he does not have major problems with the e-commerce rules and suggested a few small changes like logistics suppliers shouldn’t be considered related parties of e-commerce companies. This can be easily accommodated," a senior commerce and industry ministry official said on condition of anonymity.

Companies have been seeking clarity on the new definition of e-commerce proposed in the Consumer Protection (e-commerce) Rules, 2020, and the clause mentioning ‘related parties’.

Mint reported on Monday that the Internet and Mobile Association of India (IAMAI), in a letter to the government, said the proposal to include manufacturing entities or logistics players as “related parties and associate enterprises" goes beyond the scope of the Consumer Protection Act, 2019. “Merely being a related party of an e-commerce entity cannot automatically be construed that such entity be also classified as ‘e-commerce entity’, especially since such a related party may not have any online business at all," the letter said.

According to the proposed norms, even people engaged by e-commerce entities for the fulfilment of orders, such as for storage, inventory and order management, will be construed as e-commerce entities. Any outsourcing service provider or a vendor, too, will be deemed an e-commerce entity, thereby curtailing such entities’ right to access the market through e-commerce, the letter said.

The official said the suggestion to reduce the compliance burden on startups and MSMEs will also be resolved at the time of finalizing the e-commerce rules. However, the government is insistent that e-commerce data can’t be used by group companies of the e-commerce player without the explicit approval of the consumer. The fall-back liability prescribed in the rules is unlikely to be changed, the official said.

The rules define “fall back liability" as the liability of a marketplace e-commerce entity where a seller registered with such entity fails to “deliver the goods or services ordered by a consumer due to negligent conduct, omission or commission of any act by such seller in fulfilling the duties and liabilities in the manner as prescribed by the marketplace e-commerce entity, which causes loss to the consumer."

The official said the government wants to make these changes through e-commerce rules, rather than FDI policy for e-commerce, as it wants these to be applicable to all e-retailers uniformly, whether they are domestic or foreign.

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