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NITI Aayog’s objections to draft e-commerce rules provokes angry response from CAIT

In a letter to the Commerce Minister, CAIT accused NITI Aayog of colluding with foreign e-commerce giants.

The Confederation of All India Traders (CAIT) hit out at NITI Aayog for interfering in the draft E-Commerce Rules proposed by the Consumer Affairs Ministry and said that the Indian government’s think tank is working according to the whims and fancies of foreign e-commerce companies.  

Praveen Khandelwal, CAIT Secretary-General, also wrote a letter to Piyush Goyal, Union Minister for Commerce and Consumer Affairs, reiterating that the last date for submissions on the draft rules was July 21, 2021, and considerable time has elapsed since the due date. He urged Goyal to roll out the e-commerce policies at the earliest, ahead of the festive season to ensure smooth compliance with the rules so that e-commerce entities can conduct their businesses in a stipulated manner. 

NITI Aayog had objected to the Ministry of Consumer Affairs proposing amendments to E-Commerce Rules 2020 stating that several provisions didn’t fall under the jurisdiction of the ministry and should be reconsidered. This indicates that there are differences within the government regarding the policy in its current form. 

Read: Summary of the proposed amendments to E-Commerce Rules, 2020

NITI Aayog’s Objections 

As per reports, NITI Aayog had raised several objections regarding the draft e-commerce rules such as –

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  • Other departments like the Department for Promotion of Industry and Internal Trade (DPIIT) or the Commerce Department or the Home and IT ministries should draft the rules since several provisions fall beyond the jurisdiction of the consumer protection department. 
  • 72 hours timelines for e-commerce firms to respond to the government’s investigating agencies should be left to other ministries. 
  • On the draft rules prohibiting flash sales, NITI Aayog said that while it is important from a consumers’ perspective, they don’t concern consumer welfare directly. 
  • Reduced prices offered during ‘flash sales’ promote consumer interest and should be left to DPIIT
  • Some provisions (of the draft rules) are inconsistent with the current FDI policy and affect the ease of doing business. 

What did CAIT’s letter say?

The letter accused NITI Aayog of colluding with e-commerce giants and ignoring the strictures passed by Delhi High Court and comments made by the Supreme Court and Karnataka High Court related to them.  Tthe letter also accused NITI Aayog of ignoring the fact that the Competition Commission of India and the Enforcement Directorate have launched investigations against them.

CAIT urged that the proposed e-commerce rules should be promulgated at the earliest since they had taken into consideration ‘extensive consultations’ of different stakeholders.

CAIT’s suggestions to the proposed E-Commerce Rules 

CAIT had emphasised that India’s e-commerce rules need to be consumer-centric. Besides boosting consumer confidence, the government should also motivate smaller retailers and MSMEs to adopt e-commerce, CAIT said. The confederation had suggested four key points to achieve both these objectives :

  • Transparent operations of e-commerce platforms: CAIT suggested that e-commerce platforms should disclose the complete terms and conditions between platforms and sellers registered on them. E-commerce platforms should also disclose all information about the sellers and products to the consumer at the pre-purchase stage and the platforms must transparently display the search algorithm to consumers to allow them to make informed choices.
  •  Easy accessibility and adequate grievance redressal by e-commerce entities: E-commerce platforms should provide customer care numbers to consumers to call in case they face any problems like late deliveries, defective products, sales service, cancellation issues, etc.
  • Non-discriminatory access of marketplace platforms to all stakeholders: Sellers must have non-discriminatory access to their choice of logistics of service providers and payment gateway providers. The platform must not create any discrimination under the guise of differentiation and every differentiation so created must not be arbitrary. E-commerce platforms must not be allowed to deny registration to a service provider for providing services. It also suggested new rules that will disable marketplace entities from creating preferential sellers, preferential logistics partners, and preferential payment gateways. These rules will help prevent practices like predatory pricing, deep discounts, and capital dumping.
  • Avoidance of conflict of interest between marketplace platforms, sellers, and various service providers on the platform: Marketplace-based e-commerce platform and its related entities should not be allowed to sell on the platform and an inventory-based e-commerce platform should be the only seller on the platform and not enroll third-party sellers. In order to prevent cross-subsidy and create a level-playing field for all sellers on the platform a new rule should be added to prevent e-commerce entities from charging bundled fees “for services provided with respect to the e-commerce platform and any other services provided by the entity to the consumers like videos and movies, delivery, etc. In order to avoid confusion, if the same company or its related parties/associated enterprises are operating an e-commerce marketplace platform as well as an inventory-based e-commerce platform, the two platforms cannot use the same or similar brand name or branding.

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