Proposed E-commerce Norms Can Hit Consumer Interest, Increase Compliance Burden For Firms: IAMAI

The proposed e-commerce rules might negatively affect client curiosity, whereas making a excessive degree of uncertainty and improve the compliance burden for not simply e-commerce firms however MSMEs offering providers to on-line retailers, in accordance with trade physique IAMAI.

The draft e-commerce guidelines launched by the federal government on June 21 proposes to ban fraudulent flash gross sales and mis-selling of products and providers on e-commerce platforms.

The appointment of a chief compliance officer/grievance redressal officer are among the many key amendments proposed below the Consumer Protection (E-Commerce) Rules, 2020.

In its submission on the draft guidelines, the Internet and Mobile Association of India (IAMAI) stated the proposed amendments elevate a number of considerations and ambiguities from an e-commerce enterprise standpoint, that are additionally prone to have unintended unfavorable penalties for customers.

“A uniform application of these Amendments/Rules across all e-commerce models would not be feasible, is far from ideal, would impact businesses as well as consumers, and will create a high level of uncertainty in an industry that is still in its growth stages and would benefit from light-handed regulation,” it added.

The affiliation famous that the amendments fail to supply a level-playing area between on-line and offline e-commerce/retail. Under the amendments, e-commerce platforms will face a number of restrictions and an elevated compliance burden. However, the identical won’t be relevant on the brick-and-mortar shops, it stated.

The trade physique identified that implementation of the amendments in its present kind will “significantly increase the compliance burden on MSMEs as well as for start-ups who are not even in the e-commerce business, but provide services to e-commerce”.

IAMAI has additionally urged that the idea of “fall-back liability” be executed away with because it dilutes the middleman protected harbour below the provisions of the IT Act in addition to the arm’s size necessities supplied below the FDI coverage.

One of the proposals states {that a} market e-commerce entity might be topic to a ‘fall-back legal responsibility’ the place a vendor registered on its platform fails to ship the products or providers ordered by a client because of negligent conduct, omission or fee of any act by such vendor.

“It will open the floodgates for unscrupulous claims against e-commerce entities. It can significantly change the landscape of e-commerce in India and impede innovation and access of small sellers to marketplace platforms (whom e-commerce marketplace entities may not onboard due to the apprehension from fall-back liability),” it stated.

However, a diluted model of this rule could also be relevant on inventory-based e-commerce entities, as they management, personal and handle the stock of the products/providers being bought, it added.

Previously, the Indo American Chamber of Commerce (IACC) had stated the proposed rules might improve compliance liabilities, have an effect on international investor sentiment with respect to ease of doing enterprise within the nation, and severely impair the expansion of the web commerce sector.

Supreme Court senior advocate Gopal Jain had stated holding e-commerce firms liable for items bought by another sellers and proposed restrictions on the sale of products by associated events on the platform will damage the MSMEs.

The authorities on Monday prolonged until August 5 the deadline for public feedback on proposed amendments to the Consumer Protection (E-Commerce) Rules, 2020. Earlier, the final date for public feedback on the draft e-commerce guidelines was July 6.

Alliance of Digital India Foundation (ADIF) — a gaggle of homegrown startups — had welcomed the proposals saying these will defend client pursuits in the long term. There is a powerful emphasis on eliminating discrimination towards Indian sellers and manipulation of consumers and the market by bigger e-commerce gamers, it added.

The organisation said that reductions are principally provided on slow-moving and perishable stock holdings, however deep discounting might kill good and/or competing merchandise.

“While larger players can resort to such tactics and survive to create market dominance, smaller players will not be able to afford these discounts for longer periods and will bleed out of existence,” it stated. ADIF stated it helps the federal government’s intent in direction of defending the small and medium sellers.
“However, the rules tend to miss the mark on ensuring friendliness for small and medium players. Solopreneurs and women entrepreneurs, especially, merit special consideration and attention.

“ADIF advocates zero paperwork for them as much as GST threshold (Rs 20 lakh) and minimal compliance requirement for all sellers at the very least until Rs 1 crore of income,” it said.

ADIF also highlighted that smaller e-commerce entities will find it difficult to appoint three separate people as a chief compliance officer, nodal contact person and resident grievance officer. It suggested that until the DPIIT registrations are completed, the founders should be given permission to act as the above officers of the company.

Up to a certain turnover, e-commerce entities should have the flexibility to nominate one person who can act as a nodal contact person as well as chief compliance officer and resident grievance officer.

On cancellation charges imposed by e-commerce entities, ADIF said that these charges should be imposed by e-commerce entities (when a customer cancels an order) only if it will provide similar cancellation charges when cancellation is done by the seller or the e-commerce firm.

“However, e-commerce entities could also be exempt from this rule in instances the place the cancellation expenses are levied by sellers and e-commerce entities are solely passing on the fees to the client,” ADIF Executive Director Sijo Kuruvilla George said.

In its suggestions, the ADIF also urged the ministry to re-examine the provision of fall-back liability on marketplace e-commerce entities. “This legal responsibility provision defeats the very precept of protected harbour rule which acts as a safety to intermediaries below Section 79 of the IT Act,” it stated.

It said that extra deliberation is required to create provisions to guard the pursuits of Indian market entities which have invested in related events or personal labels.


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