Industry groupings seek major changes in draft ecommerce rules

22 Jul
2021

Industry groupings seek major changes in draft ecommerce rules

By Staff Writer

Industry associations, including those that count eCommerce majors Walmart-owned Flipkart and Amazon India as members, have sought the revision of a host of contentious clauses in India’s draft eCommerce rules including the deletion of those seeking to include related parties and logistics service providers within the definition of an e-commerce entity, ban flash sales and mandate the listing of local alternatives while selling imported goods or services.

In a submission to the department of consumer affairs on Wednesday, USISPF (US-India Strategic Partnership Forum) said that the draft proposals are "problematic and fail to take into consideration that not all marketplaces are alike and may not share similar relationships with buyers and sellers, negating the need for or effectiveness of prescriptive measures". The submissions by the Internet and Mobile Association of India (IAMAI) and IndiaTech were also on similar lines.

The USISPF has sought the deletion of clauses to include 'related parties and service providers for order fulfillment as e-commerce entities as well as those banning flash sales, registration requirements with DPIIT (Department for Promotion of Industry and Internal Trade), and the fall-back liability on online marketplace – where platforms have to be liable if a customer is unhappy with the products.

ET has reviewed the submissions made separately by each of the groupings.

The draft proposals were first announced on June 21 triggering an immediate reaction with online platforms, brands, and select sellers criticizing it. Offline traders and smaller online sellers have welcomed some of the proposals but have also demanded greater clarity.

Following an uproar from the industry, the government extended the deadline for stakeholders to submit their feedback to Wednesday, July 21.

Onerous Clauses

Terming the mandate to classify goods and services based on the country-of-origin and, for online marketplaces to offer locally made alternatives to consumers at the pre-purchase stage as "onerous", the USISPF said it would lead to increased costs and impede innovation ‘without a clear policy justification since it is not apparent why consumers would require such a filter mechanism’. It sought the retention of the current framework without further changes.

Last year, following a border clash between India and China, the Centre had directed etailers to update product listings with information on the country of origin.

However, e-commerce companies and sellers are yet to comply as it’s cumbersome to update millions of listings online, according to industry executives who point out that a single product can include parts made in multiple places. Besides, a trader may buy an imported product locally.

"The proposed amendments deal with issues which have no nexus with aspects of consumer protection, and most of the suggested changes do not seem to further consumer interest being the core objective of the Consumer Protection Acts (CPA) and its related proposed amendments," USISPF said in its note to the department of consumer affairs.

Ambiguities Persist

On July 5, ET reported that firms like Amazon India, Flipkart and the Tata Group had raised concerns with the government in a meeting over issues like "related-party clause", the proposal to not allow an e-commerce platform from using its name in its private brand, among others.

A common theme in the submissions made on Wednesday were aspects pertaining to antitrust and data-related clauses with the industry groupings requesting that such clauses be left out of the purview of the e-commerce policy while other concerned departments or ministries address it.

"The amendments raise several concerns and ambiguities from an e-commerce business standpoint, which are also likely to have unintended negative consequences for consumers ultimately," IAMAI stated.

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