02 Sep 2021 Draft e-commerce rule

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Draft e-commerce rule

Context:

The Department of Consumer Affairs is said to be revising some parts of the draught e-commerce rules, 2021, after receiving criticism from industry and some sections of government.
The requirements of the Consumer Protection (E-Commerce) Rules, 2020, under the Consumer Protection Act, 2019, were previously notified and made effective by the Ministry of Consumer Affairs, Food, and Public Distribution.
In addition, the Department of Promotion of Industry and Internal Trade (DPIIT) has issued orders establishing an advisory council for its Open Network for Digital Commerce (ONDC) project, which is intended at preventing “digital monopolies.”
This is a step toward making e-commerce procedures open source, resulting in a platform that all online shops may use.

Mandatory Registration: E-commerce businesses must register with the Department of Promotion for Industry and Internal Trade (DPIIT) of the Ministry of Commerce and Industry.
Persons who own, run, or manage a digital or electronic facility or platform for electronic commerce are referred to as e-commerce entities.
Flash Sales Aren’t Banned: Traditional e-commerce flash sales aren’t prohibited.
Compliance Officer: E-commerce businesses are also required to establish a Chief Compliance Officer (CCO) and a nodal contact person to coordinate with law enforcement agencies 24 hours a day, seven days a week.
Restrictions on Relatives: To address growing concerns about preferential treatment, the new guidelines propose that no linked party can utilise any consumer information (from the online platform) for an “unfair advantage.”
Clause of Country of Origin: Entities must additionally identify items based on their country of origin and provide a filtering option for buyers during the pre-purchase stage. They will also have to propose alternatives to these imported goods in order to give domestic retailers a “fair chance.”
Reporting Cybersecurity Issues: Any e-commerce entity must respond to a government agency’s request for information within 72 hours if the agency is investigating a law violation, including cybersecurity issues.

The draught guidelines declare that “none of an e-commerce entity’s’related parties can be enlisted as a vendor for direct sale to consumers.”
This “wide definition” of “associated party” might possibly include all enterprises, such as logistics companies, joint ventures, and so on.
As a result, it will be difficult for not only international businesses like Amazon and Flipkart, but also domestic companies to offer their varied brands on their super-apps, such as 1mg, Netmeds, Urban Ladder, and so on.
On the one side, industry players complain that the FDI (Foreign Direct Investment) regulation prevents companies like Amazon and Flipkart from having control over the inventory sold on their platforms.
The guidelines, on the other hand, created the notion of fall-back responsibility, which holds e-commerce companies accountable if a seller on their platform fails to provide goods or services due to negligent behaviour, resulting in a customer loss.

The National Institute of Transforming India (NITI Aayog) has expressed concern that many of the measures in the draught rules go “beyond the realm” of consumer protection.
The Consumer Affairs Department is accused of “overreach” as a result of this.
A Strictly Regulated Situation: Some of the proposed rules, such as establishing a compliance officer and complying with law enforcement demands, are similar to the Information Technology (Intermediary) Rules, 2021.
Several High Courts are challenging these IT regulations.
As a result, the restrictions reflect the government’s growing desire to exert greater control over all internet platforms.

Yojna IAS Current Affairs Team