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E-commerce companies and industry associations gave their recommendations to the government, calling for several changes to the proposed Consumer Protection (e-commerce) Rules, 2020, on Wednesday, the last day to submit their feedback.

The entities said the new rules would be a major deterrent for the industry. In addition, they will lead to roadblocks for several small and medium enterprises (SMEs) trying to sell online as they recover from the impact of the pandemic.

Mint reviewed at least three documents submitted to the government by industry associations.

Several industry bodies, including the Internet and Mobile Association of India (IAMAI), Confederation of Indian Industry (CII), US India Strategic Partnership Forum, US-India Business Council, along with Amazon India and Walmart-owned Flipkart, sent their representations to the government, including the Prime Minister’s Office.

In their representations, stakeholders argued that the definition of e-commerce proposed by the consumer affairs ministry is so broad that it includes offline establishments such as kiranas, which merely play a small part in the fulfilment process of online orders.

By widening the definition, the government might be risking forcing even smaller sellers to comply with the proposed e-commerce rules, increasing the compliance burden and affecting their ease of doing business, the stakeholders said.

E-commerce firms suggested the government make sellers, instead of e-commerce entities, liable for operational issues.
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E-commerce firms suggested the government make sellers, instead of e-commerce entities, liable for operational issues.

“The broad definition of e-commerce is still unclear, and proposed changes to rules are neither in favour of the consumers nor the sellers. Through the amendments, the government will make it harder for smaller sellers to come online, adversely affecting consumer choice and increasing compliance burden, which may result in price hikes," said an e-commerce executive on condition of anonymity.

Industry stakeholders said the so-called fall-back liability on e-commerce companies for sellers on their platforms goes against the principles of the foreign direct investment (FDI) policy under Press Note 2, 2018, which already bans the platforms from exercising any control over sellers.

The representations also pointed out the overlaps in the proposed amendments to e-commerce rules with existing laws and guidelines, including competition regulations, draft data protection rules, Legal Metrology (Packaged Commodities Rules), 2011, Press Note 2, 2018. This, they said, will cause widespread confusion among e-commerce platforms on the final operational guidelines.

CII, IAMAI, Nasscom, Flipkart and Amazon India didn’t respond to Mint’s queries until press time.

Almost all industry associations and e-commerce players sought deletion of the proposed amendments to curb ‘flash sales’, fearing arbitrary enforcement to confusing rules, said two people aware of the discussions.

Further, e-commerce companies suggested the government make sellers, instead of e-commerce entities, liable for operational issues, including displaying invoice numbers, country of origin and details of importers on goods sold on the marketplace, the people said.

“The proposed amendments are a back-step for the digitization undertaken by the Indian economy. While the rules are clearly biased and unfavourable towards the online economy, it expects a small seller (with minor online operations) to undertake the same compliance burden as large marketplaces in the country. The government should bring in distinctions for these different grades of e-commerce operations and undertake fresh consultations to understand the challenges," said Vinod Kumar, president of the India SME Forum.

“In the end, e-commerce companies will pass on the compliance cost to sellers, which will reflect in their commissions," he said.

India SME Forum plans to submit a written petition from about 4,288 sellers, requesting the government to scrap the current proposed draft of e-commerce rules, and hold fresh stakeholder consultations.

“Smaller SMEs whose annual online turnover is below the threshold of 5 crore per year, the requirement of having a grievance officer must be removed. Similarly, these sellers must be allowed to upload an image of the Principal Display Panel (PDP) label for all product information instead of having to manually upload this information for each product in text form, to save time and manpower cost," said Sachin Taparia, founder and chairman of LocalCircles, a community social media platform, which also has written to the government.

Industry stakeholders are now asking the government to hold fresh consultations on the proposed amendments to get a fair representation of their views.

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