What India’s new rules mean for e-marketplaces

Context:  

The Centre has proposed additions and changes to the Consumer Protection (E-commerce) Rules, 2020. This has caused confusion among e-commerce firms and stakeholders. 

To whom the new rules applicable? 

According to the definition provided in the rules, these rules apply to “all goods and services bought or sold over digital or electronic networks including digital products”. 

These rules apply to  

• Large marketplaces such as Amazon, Flipkart 
• Food aggregators Swiggy and Zomato,  
• Single brand e-commerce sites and grocery sites 
• Specialised vertical-led platforms such as FirstCry, Nykaa 
• Taxi aggregators such as Ola and Uber 
• Big techs including Facebook Marketplace. 

What are the major challenges with the rules?  

• Multiple ministries governing operations of e-commerce firms: The rules come at a time when DPIIT is working to release a separate e-commerce policy and the IT ministry is working on the Personal Data Protection Bill. This is likely to create fresh regulatory bottlenecks, overlaps, and ambiguities in terms of law for e-commerce players in the country.  
• Increase the compliance burden of e-commerce firms: For insta­nce, the rules require all e-com­merce firms to appoint a grievance officer, a chief compliance officer and a 24×7 nodal officer. 
• Several proposals require either a change in their existing business model or for them to make product changes. For instance,  

• The rules ask e-tailers to send a notification and suggest “alternative” goods manufactured in India. So, the e-commerce firms not only have to rank goods but also come up with a framework such that the ranking does not discriminate against domestic goods and sellers. 
• No marketplace or e-commerce entity will be allowed to sell goods or services to any person who is registered as a seller on its platform. Companies argue that with such restrictions will be near impossible. 

• Not a level playing field: Offline retail stores often have selected previews and better discounts for their loyalty programme customers. If the argument is to have a level playing field, then the government must create similar rules in the offline market too. 

Conclusion:  

Online marketplaces promote competition, enable transparency in terms of product offering, prices, delivery speed and returns. So, the draft policy needs a relook.  

Read more: 

• Draft e-commerce rules and their challenges – Explained, pointwise 
• Draft e-commerce rules 

Source: Livemint ,Business Standard and Times of India