Just as it did with a clutch of guidelines to social media and OTT platforms, and digital media, the Indian government is proposing guidelines for e-commerce companies. And this includes appointment of a chief compliance officer, giving preference to the sale of locally produced goods, mandatory registration of e-tailers with Department for Promotion of Industry and Internal Trade (DPIIT), banning of online flash sales in an attempt to make the e- commerce companies more accountable.
The last named has got a bigger play in news media headlines, and there is a misgiving that the flash sales that platforms like Amazon and Flipkart are famous for would be totally hit.
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Amazon, Flipkart can rest easy
Fret not. That is not the case. The government media release in this is specifically clear. "Conventional flash sales by third party sellers are not banned on e-commerce platform," the government said and added "But, certain e-commerce entities are engaging in limiting consumer choice by indulging in 'back to back' or 'flash' sales wherein one seller selling on platform does not carry any inventory or order fulfilment capability but merely places a 'flash or back to back' order with another seller controlled by platform. This prevents a level playing field and ultimately limits customer choice and increases prices."
This would make it clear that only flash sales that seek to exploit market buzz would be hit. And that is as it should be. So Amazon, Flipkart and others can rest easy.
Level playing field for domestic players
Government expects the e-commerce companies to have in place a Chief Compliance Officer, a nodal contact person for 24x7 coordination with law enforcement agencies, officers to ensure compliance to their orders and Resident Grievance Officer for redressing consumer grievances.
Like in the case of social media platforms, the proposed guidelines here too the government wants e-commerce companies to appoint a Chief Compliance Officer, a nodal contact person for 24x7 coordination with law enforcement agencies, officers to ensure compliance to their orders and Resident Grievance Officer consumer grievances. "This would ensure effective compliance with the provisions of the Act and Rules and also strengthen the grievance redressal mechanism on e-commerce entities," the government said.
E-commerce companies are also expected to register with the Department of Promotion for Industry and Internal Trade (DPIIT). They would also have to share information with the “Government agency, which is lawfully authorised for investigative or protective or cyber security activities, for the purposes of verification of identity, or for the prevention, detection, investigation, or prosecution, of offences under any law for the time being in force, or for cyber security incidents”.
Further, to ensure that the domestic manufacturers and suppliers get a fair and equal treatment, e-commerce platforms have to incorporate a filter mechanism to identify goods based on country of origin and suggest alternatives to ensure fair opportunity to domestic goods.
Govt seeks views on proposed changes
India's e-commerce sector, expected to get past $100 billion in 5 years, has thrown up regulatory challenges to the government with big corporations seeking to dominate the sector with aggressive business practices that directly affect small and medium big and mortar entities.
Indian traders, on the other hand, have often complained about steep discounts and flash sales offered by online companies which smaller retailers are unable to match.
Amazon and Flipkart say that they are not doing anything that flouts the local laws.
The Ministry of Consumer Affairs, Food & Public Distribution, which is piloting these changes, said the proposed amendments to the rules aim to bring transparency, strengthen the regulatory regime, protect consumers' interests, and encourage free and fair competition, the statement said.
It has sought views and suggestions on these amendments to the Consumer Protection (E-commerce) Rules, 2020.
The proposed amendments are available on the website of Department of Consumer Affairs (opens in new tab) and views/comments/suggestions on the draft rules may be sent to: firstname.lastname@example.org within 15 days (till July 6, 2021).
The new rules are expected to kick in from July 26, 2021.