Karnataka governor approves bill to regulate e-commerce platforms selling farm produce; violators face six-months jail, Rs 1 lakh fine

The bill defines an e-commerce platform as an online medium facilitating licenced traders to sell market fee-paid notified agricultural produce to licenced retail traders in a designated market area. It also allows farmers to make payments via electronic methods.

Additionally, warehouse service providers are brought under regulation, requiring them to charge service fees only from buyers—capped at 5 percent of the sale price for perishable goods such as fruits, vegetables, and flowers, and 2 percent for other agricultural products.

Under the new law, warehouse service providers must ensure the safe storage of goods, insure them against risks like fire, theft, and natural calamities, and offer necessary facilities such as electronic weighing, fire safety measures, and quality certification.

They are also mandated to provide a pledge loan facility. If payments are delayed beyond five days, the provider must compensate sellers at a rate of 1 percent of the total transaction value per day. Failure to comply may result in the revocation of their warehouse-based sales declaration.

Licence fee for e-commerce platforms

The bill introduces a licensing framework for e-commerce platforms trading in notified agricultural produce.

“No platform can operate without obtaining a licence from the Director of Agricultural Marketing, who will prescribe the necessary fees and security deposits. These platforms must provide payment facilities, maintain transparency in operations, ensure proper record-keeping, and facilitate services such as quality certification, collateral financing, and grading of commodities”, it said.

E-commerce licences must ensure that only authorised traders are allowed on their platforms and that transactions are conducted in a fair and transparent manner. Additionally, the platforms must trade exclusively in market fee-paid goods and, if found otherwise, will be liable to pay the applicable market fee themselves. Licensees are required to submit periodic reports detailing all transactions conducted on their platform to the licensing authority.

The Director of Agricultural Marketing has been empowered to suspend or cancel an e-commerce platform’s licence if it was obtained through fraud, if the licensee violates any terms of operation, or if they engage in activities that obstruct the marketing of notified agricultural produce. Licence holders can appeal such decisions to the Karnataka Appellate Tribunal within 30 days of receiving an order.

“Disputes related to payments, weight, quality, pricing, and other charges must be submitted to the Director of Agricultural Marketing within 30 days. The director is required to resolve disputes within 60 days after hearing all concerned parties”, it adds.

Apart from this bill, the governor has also given his assent to other bills to rein harassments from private financers, including Karnataka Prohibition of Charging Exorbitant Interest (Amendment), Karnataka Pawn Brokers (Amendment), and Karnataka Money Lenders (Amendment).

Also, read: Karnataka: Microfinance ordinance gets governor’s nod; violators face up to 10 years in jail, Rs 5 lakh fine