NEW DELHI: Electronic marketplaces such as Amazon and Flipkart may have to tweak some of their policies after the Centre on Monday proposed tighter norms aimed at providing more transparency, including checking sale by companies where e-commerce players own a stake and curbs on sharing of data.
From proposing to prohibit “flash sales” that benefit only preferred sellers to holding online marketplaces responsible for the actions of a seller registered on the platform, the slew of intended measures by the consumer affairs ministry come against the backdrop of local trader bodies demanding action against alleged malpractices by e-commerce giants.
The revised Consumer Protection (E-Commerce Rules), 2020, also propose that all e-commerce companies operating in India will need to be registered with the government.
E-tailers may have to register with govt, curb sales by related parties
The proposal is a bid to rein in foreign e-commerce companies such as Chinese players Club Factory and Alibaba that were found selling goods directly to Indian consumers by evading taxes and duties. They will have to appoint a chief compliance officer and a nodal contact person for 24×7 coordination with law enforcement agencies. They will also need to have a resident grievance officer to address consumer complaints.
“By requiring e-commerce entities to register with the DPIIT and appoint a chief compliance officer, nodal officer and grievance officer who are citizens of (and resident in) India, the proposed rules seek to hold e-commerce entities which operate in India accountable,” said Archana Tewary, partner, J Sagar Associates. “The proposed rules also seek to regulate the manner in which consent will be obtained from consumers for the sharing of their data with other persons.”
The revised proposals seek to mandate the sharing of information by e-commerce entities with governmental authorities within 72 hours and require e-commerce marketplaces to ensure that none of its related parties and associated enterprises are enlisted as sellers for sale to consumers directly. “The definition of associated enterprises also seems to be wide. These changes are wide-ranging and will have significant implications,” said Tewary.
Released for stakeholder consultations, the draft notification comes 11 months after rules for e-commerce were first notified. This time, it also brings under purview in-house logistics companies operated by e-commerce players. The draft rules said no in-house logistics provider will offer differentiated treatment to sellers of the same category.
The ministry said these proposed changes in the rules have become necessary due to unfair trade practices by online platforms. These included engaging in manipulating search results to promote certain sellers, preferential treatment to some and indirectly operating the sellers on their platform. It said all these impinge on the free choice of consumers and companies using the platform sell goods that are close to expiration.
Senior executives at large e-commerce companies termed the draft rules as archaic measures that fall under “license raj”.