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What is the News?
The Government of India may soon dilute some of the clauses of the Draft E-Commerce Rules as the Ministry has completed consultation with e-commerce companies, industry associations and other relevant stakeholders.
What are the contentious Draft E-Commerce Rules that have been objected by the industry?
| Contentious E-Commerce Rules | Objections to these Rules | |
| Limiting Flash Sales | Specific flash sales or back-to-back sales which limit customer choice, increase prices and prevent a level playing field are not allowed. | Regulating “flash sales” doesn’t promote consumer welfare. Instead, the reduced prices promote consumer interest. |
| Fall back liability | E-commerce platforms will be liable when the delivery of goods or services fails, causing loss to the consumer. Earlier, in case of such failures, the ecom platforms used to direct the buyer to the vendor who had originally put the product on the e-com site. | FDI (Foreign Direct Investment) policy prohibits foreign-funded players to sell their own inventory or influencing prices of goods sold by domestic platforms that can sell their own inventory. On the other hand, the rules introduce the concept of fallback liability, which holds them liable for any discrepancies on account of the seller. |
| Related parties and associated enterprises | The rules state that parties and associated enterprises related to a particular e-commerce company will not be allowed to be enlisted as sellers on that platform. | The “broad definition” of ‘related party’ can potentially include all entities such as those involved in logistics, any joint ventures, etc. Due to this, it will be difficult not only for foreign players like Amazon and Flipkart but even home-grown companies to have their various brands. |
Source: This post is based on the article ‘Govt likely to dilute draft e-commerce norms as consultation ends’ published in Business Standard on 27th Dec 2021.
