India plan for tighter e-commerce rules faces internal govt dissent: Report

What is the news?

India’s plan to tighten rules on its fast-growing e-commerce market has run into internal government dissent, memos reviewed by Reuters show. The Ministry of Finance has described some proposals under the draft e-commerce rules as “excessive” and “without economic rationale”.

It should be noted that there’s not yet a formal implementation timeline for the new rules.

What are the concerns and opinions of various stakeholders on draft ecom rules?

Ministry of Finance: The finance ministry has raised a total of 12 objections. Among them, it said, a proposal that makes online shopping websites liable for its sellers’ mistakes would be a “huge dampener” and could force companies “to revisit their basic business models”.

It also lodged a protest against the banning of flash sales, which see deep discounts on offer on websites like Amazon and are popular during festive seasons.

As per Min of Finance, the proposed amendments are likely to have significant implications/restrictions on a sunrise sector and ‘ease of doing business. Hence, care needs to be taken to ensure that the proposed measures remain ‘light-touch regulations’.

The proposals go far beyond their stated aim of protecting consumers and also lack regulatory clarity.

NITI Aayog: The rules could hit small businesses. Moreover, they send the message of unpredictability and in-consistency in our policy-making.

US Govt: New Delhi has in recent years changed e-commerce policies too often and taken a hard-line regulatory approach that especially hurts American players.

Corporate Affairs Ministry: It had objected to one proposed clause to be enshrined in new rules that says e-commerce firms should not abuse their dominant position in India. The ministry said the provision was “unnecessary and superfluous”, and that the subject was best handled by India’s antitrust watchdog i.e. Competition Commission of India (CCI).

Brick and mortar retailers: They welcomed the proposals, stating repeatedly that big U.S. firms have bypassed Indian laws and their practices have hurt small retailers.

Consumer Affairs Ministry: The consumer affairs ministry, which drafted the rules, said the new rules were aimed to “further strengthen the regulatory framework” and were issued after complaints of “widespread cheating and unfair trade practices being observed in the e-commerce ecosystem.”

What is the significance of this?

The concerns expressed would likely cause a rethink of the e-commerce policy.

Source: This post is based on the article “India plan for tighter e-commerce rules faces internal govt dissent: Report” published in Business Standard on 21st Sep 2021.