Meanwhile, trade associations urged the government to not dilute the rules and opposed the deadline extension.
After multiple stakeholders raised concerns over the proposed amendments to the E-Commerce Rules, the Department of Consumers Affairs on Monday extended the deadline for submitting comments and suggestions from July 6 to July 21, 2021.
The government on June 21 proposed amendments that give the existing Consumer Protection (E-Commerce) Rules, 2020 more teeth. The proposed changes include new rules to address abuse of FDI regulations, the establishment of a grievance redressal mechanism, new display and labelling criteria for foreign goods, the prohibition of flash sales, data protection for customers, among other things.
Will have major impact on business model: Amazon, Tata
At a meeting organised by the consumer affairs ministry, Amazon and Tata warned government officials that the proposed amendments would have a major impact on their business models, Reuters reported on Saturday.
Amazon argued that the proposed rules will hurt small businesses on its platform who are already suffering from the impact of COVID-19. The company also said that some clauses were covered by existing law, the report stated.
The rules state that related parties and associated enterprises of an e-commerce platform cannot be sellers on that platform. This will most likely impact Amazon, which has stakes in its two biggest sellers, Cloudtail and Appario. Tata Sons pointed out that this provision is also problematic for Tata Group because it prevents Tata’s marketplace platform from selling Starbucks products because the company has a joint venture with the coffee giant in India, the report stated.
According to Economic Times, “Tatas also raised the point that its brand name has huge trust among consumers and not allowing it to use the same for its private brands, for example, Tata Sampann, for online retailing would not be in the spirit of enhancing consumer choice in e-commerce.”
Reliance, on the other hand, said that the proposed rules would boost consumer confidence, but added that some parts needed clarification, the Reuters report stated.
Industry bodies raise concerns over certain clauses
Several industry bodies like FICCI, CII, Assocham, and IAMAI also raised issues around the “related-party clause” and the clause that prevents platforms from selling private label products, Economic Times reported. The definition of “related party” has been made “so broad that it could make even a logistics player servicing an online order a related party”, the report cited a source as saying.
The industry bodies had also requested the government to move data-related provisions to the upcoming Personal Data Protection Bill and remove them from the e-commerce regulations. The data-related provisions disallow e-commerce platforms from using information collected by them to promote sales of their own products or give an advantage to a particular group of sellers.
Does not protect the interest of consumers
The proposed rules prohibit flash sales and limit how e-commerce platforms promote products and sellers on their websites. While these might appear to create a level playing field between online and offline retailers, it’s likely to have a negative impact on consumers who can no longer enjoy the deep discounts offered by e-commerce platforms. The provision that disallows e-commerce platforms from using their brand name for products might also affect consumer choice.
“The biggest stakeholders as far as e-commerce platforms are concerned are the millions of consumers who are getting better choice and prices and small merchants who are getting a chance to make their products reach pan-India. Sadly, their interests are not being talked about but the interests of the competition are being protected,” Arvind Singhal, Chairman and MD of retail advisory firm Technopak, told Indian Express.
Global investors flag concerns
The proposed rules may further compound the impact of a multiplicity of regulations on the e-commerce sector, the Indo-American Chamber of Commerce (IACC) said on Tuesday, according to Business Standard. “We also draw your attention to the fact that such a measure will affect investor sentiment globally, especially with respect to ‘Ease of Doing Business’ in the country,” IACC national vice president Dr Lalit Bhasin said in a letter to the government, according to the report.
US-India Business Council (USIBC), a lobby group part of the United States Chamber of Commerce, said last month that India’s proposed amendments to the e-commerce rules are a cause for concern and will lead to a stringent operating environment for companies. The council said that the new rules “include several concerning policies, including significant limits on platforms’ ability to organise sales and handle grievances.”
Ensure no dilution to the rules: CAIT
On the other hand, the Confederation of All India Traders (CAIT), which has frequently hit out at e-commerce giants for violating FDI regulations and engaging in predatory pricing, wrote to the Prime Minister asking him to ensure that no dilution is made to the rules. CAIT was also against the extension of the deadline for submitting comments.
In the wake of expected pressure tactics of foreign funded E-commerce companies against the draft of “E-Commerce Rules under Consumer Protection Act”, @CAITIndia has today written to PM Shri @narendramodi urging him to ensure that no dilution is made in the rules.@PiyushGoyal pic.twitter.com/55ex9vthmq
— Confederation of All India Traders (CAIT) (@CAITIndia) June 27, 2021
Views/ comments/ suggestions on the proposed amendments may be sent before July 21, 2021 by email to firstname.lastname@example.org