Our flawed e-com policy sends out awful signals

Source: Livemint

Relevance: Regulatory regime in India and issues related to it.

Synopsis:  India’s regulatory framework for e-commerce needs to be market-friendly because its failure to pass this test will go against long-term economic interests.

Introduction:

As a developing economy, India’s regulatory ambitions fall short of what defines ‘regulation’.

For Further read – Draft e-commerce rules

Issues with the regulatory regime in India:

• First, regulatory agencies operate with varying, ambiguous, and controversial degrees of independence (not fully independent) from the traditional political executive.
• Second, the absence of a regulator’s political autonomy allows the executive’s discretionary and arbitrary controls over the regulatory framework.
• Third, complex legal structures can be interpreted differently and end up favoring one set of private players over others. Skewed policy frameworks that tilt in favour of some have been India’s specialty over the past 50 odd years.
  • It results in inefficient allocation of resources and impairs long-term economic efficiency. The amended Consumer Protection (E-commerce) Rules, 2020 is a live example of a complicated policy with rule revisions that will attract litigation.
  • However, the ministry of consumer affairs, food, and public distribution claim the guidelines were framed in response to complaints from consumers and traders.
  • Other restrictions on sharing data and barring ‘related’ companies from selling wares on the same platform seem like rules forged not only to hinder MNC e-com firms but also Indian conglomerates.
• Fourth, regulations have additional compliance norms which overlap and conflict with other regulations.
• Lastly, frequent amendments. For instance, e-com rules amended within a year of promulgation with an eye on upcoming elections in Uttar Pradesh.

Conclusion:

Hence, all rules need to be market-friendly, serving all participants equally and the shifting of policy for a particular agenda goes against long-term economic interests.