The government is expected to notify consumer-protection rules for e-commerce by the end of August, after the current session of Parliament, according to sources privy to the development.
Last week, e-commerce companies including Amazon and Flipkart, sent their response to the draft policy, seeking clarification on multiple issues such as clauses of related parties and private labels, and asked for deletion of fall back liabilities.
According to one of the sources mentioned above, the ministry has started evaluating the responses, and will likely present it to Commerce and Industry Minister Piyush Goyal in two to three weeks. If all goes well, the notification is likely by August 20.
Unlike the existing rules for marketplaces, which cover only foreign-funded companies, this rule aims to take into account foreign as well as domestic companies running operations in India.
With the new set of drafts, the government is trying to ensure that consumers do not get a raw deal while purchasing products online and at the same time tighten the rope for marketplaces such as Amazon and Flipkart. In a recent remark Goyal said leading e-tailers were flouting laws of the land, following anti-consumer practices, and that the new rules were drafted to protect consumer interests.
With these new rules, the government is trying to ensure that no marketplace offers differentiated treatment to sellers of the same category, maintain a level playing field between the online and offline traders and see to it that marketplaces do not use the seller data generated on their platform to their own advantage, in effect banning the sale of private label products.
However multiple clauses such as not listing “related parties” as sellers or not using “information” collected through their platforms have rattled the companies. These proposals are likely to have major impacts on the arrangements with which they were running their operations in India so far.
In their written response to the government, e-commerce industry bodies have sought major changes in the proposed rules claiming that the existing proposal was detrimental for the interests of the consumers. The industry has suggested that there should not be any overlap between the Consumer Protection Act and other rules and laws such as the Competition Act and FDI norms. It has also sought further clarity on flash sales, private label products and fallback liability clauses.
India's digital economy is expected to touch $800 billion by 2030 making it the third largest digital economy in the world, according to a recent report by Redseer. It was pegged at $85-$90 billion in 2020. It also said that 88% of the online shoppers will be from Tier 2 cities between 2020-2030.
This happens at a time when a division bench of the Karnataka High Court has dismissed the plea
of Amazon and Flipkart to stop the Competition Commission of India (CCI) from conducting an investigation against the two companies. The two companies had challenged an order of the single bench judge in the division bench and are now expected to move the Supreme Court against this order.