Post facing pushback, Government reconsiders the draft e-commerce rules

Facing criticism from not only the trade but also from some sections of the federal government, the Department of Consumer Affairs is considering revising certain definitions like e-commerce entity and related party as published in the draft e-commerce rules. The draft was released earlier this year in June. 

Essentially, the most significant criticism was from within the government and is kindred to the cognizance of ‘outreach’ by the Department of Consumer Affairs venturing into the working areas of other departments of the government, including the Ministry of Electronics and Information Technology and the Department for Promotion of Industry and Internal Trade. 

The draft rules are confusing the sectoral players with various contradictions. As per the officials, the contradictions along with some provisions running against the rules of the DPIIT have been flagged. The definition of ‘related party’ has also been flagged as something “that can potentially include all entities such as those involved in logistics, any joint ventures, etc.”

Government reconsiders the draft e-commerce rules

The Department of Consumer Affairs announced the said draft rules on the 21st of June and invited the comments from Stakeholders until the 6th of July. However, the Department was forced to extend this date to the 21st of July after multiple contradictions were flagged. At present, all the comments from the stakeholders have been received, and the Department is said to be in the final stages of notifying these rules.

An anonymous Delhi-based retail executive stated that the definition of ‘related party’ as quoted by the Consumer Affairs Department required more clarity. Adding to this, the executive said that this ambiguity will lead to difficulties for e-commerce giants like Amazon and Flipkart, alongside homegrown companies like Tata and Reliance amongst others.

As per the draft rules, every e-commerce marketplace has to ensure that nothing is done by its associated enterprises and related parties that the entity itself cannot do. As per some sources, the Department might change these provisions by adding certain exclusions in the definition to address these concerns. 

A senior official from the industry said, “Provisions like fall-back liability are antithetical to the way e-commerce business models have evolved and they are even in contravention of the existing rules.” Several Industry officials have also argued that FDI prohibited the e-commerce giants from controlling the inventory sold on their platforms, while the e-commerce rules hold these platforms responsible in case a seller doesn’t deliver the services out of negligence.

The most crucial intervention to the e-commerce draft came from the Niti Aayog, which as per the source, has flagged in a memorandum stating that several provisions were ‘beyond the realm’ of the consumer’s protection. Niti Aayog’s letter to Mr. Piyush Goyal, Minister of Commerce & Industry and Consumer Affairs, Food and Public Distribution questioned the role of the Ministry of Consumer Affairs in formulating the draft rules. 

Responding to the said letter, the Confederation of All India Traders stated that Niti Aayog joined the others criticizing these rules without realizing the rules’ necessity. Meanwhile, some experts raised concerns that these rules limit consumer choices blatantly.