Stakeholders seek clarification, relook at provisions in proposed ecommerce rules

Stakeholders seek clarification, relook at provisions in proposed ecommerce rules
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22 Jul, 2021

Exemption for service providers such as ride-hailing companies, gaming and insurance from the ambit of the proposed rules and relaxation on specific provisions such as ‘fall back liability’ were primary asks on submissions made by ecommerce entities and industry associations and bodies regarding the proposed ecommerce rules.

Ecommerce entities including Amazon, Flipkart, Ola, Nykaa and industry bodies representing the interests of these entities including Internet and Mobile Association of India (IAMAI), IndiaTech, NASSCOM, Confederation of Indian Industry (CII) and affiliate of RSS, Swadeshi Jagaran Manch, have made submissions to the Ministry of Consumer Affairs on the proposed Consumer Protection (Ecommerce) Rules 2020. 

The last date for submissions was July 21. 

The amendments to the rules proposed to prohibit ecommerce entities from indulging in flash sales, listing related parties as sellers on the platform and requires ecommerce platforms to appoint a chief compliance officer. 

In its submission, software industry body NASSCOM has suggested that the prohibition on conduct of flash sales be removed as part of the rules, among other suggestions. NASSCOM’s submission said the Central Consumer Protection Authority (CCPA) should look into specific allegations of flash sales amounting to unfair trade practices. 

Similarly industry association, IndiaTech, which represents the interests of Indian consumer internet startups including Ola, Nykaa, PolicyBazaar, MakeMyTrip and investors said that the current amendments need clarity for small businesses which have gone online, as well as exemption from the rules for service providers.

“There are certain provisions that will have a serious impact on businesses. For instance, the proposed amendments suggest that the same website name and brand name will not be allowed for online sales,” said Rameesh Kailasam, CEO at IndiaTech.

He further added, “Ecommerce players spend significant time on developing private labels and such rules are therefore, highly restrictive in nature.”

As part of the submission, Swadeshi Jagaran Manch said that there should be a threshold for compulsory registration with the Department for Promotion of Industry and Internal trade (DPIIT) for e-commerce players in India as mandated by the proposed amendments. 

The organisation also suggested that ecommerce players be required to update details on total business executed, advertisement cost incurred and number of complaints received and addressed on their websites on a quarterly basis. 

While the current amendments do not need to be passed by the parliament, there are likely to be rounds of stakeholder discussions ahead of the implementation of these amendments. “… it is safe to assume on the basis of past practice that the suggestions given and the views expressed by the stakeholders will be considered,” Shreya Suri, partner at legal firm IndusLaw told TechCircle.

Talking about the proposed amendments, Suri added, “The proposed change to the definition of e-commerce entity to include related parties is especially detrimental to marketplace e-commerce entities which have evolved business models where group companies and other related entities are involved, while already being compliant with the existing FDI norms and e-commerce rules.”

As pointed out in the submissions by the industry bodies, Suri confirmed that some of the proposed amendments were in conflict with existing laws. “For instance, the duty not to display misleading advertisements placed upon e-commerce entities is in conflict with the ‘intermediary’ status of marketplace e-commerce entities under the Information Technology Act, 2000. Such entities, by definition do not have any control over the information received, stored or transmitted by them.”

“Likewise, fall-back liability for the negligence of sellers and the duty to ensure that none of its ‘logistics service providers’ provide differential treatment to sellers on the platform also directly contradicts the safe harbour given to intermediaries under Section 79 of the Information Technology Act, 2000,” said Suri.

The ministry of consumer affairs is yet to decide on stakeholder discussions on the proposed amendments.