E-commerce cos say new rules will hurt biz, urge govt to extend deadline

Govt is studying industry comments, will take a call on making relevant changes before the rules are finalised

Top companies including Amazon, Tata Group, Flipkart, Paytm and Snapdeal have reached out to the government, requesting for more time to study the proposed changes in the consumer protection rules on e-commerce and extend the deadline for submitting comments by a few weeks or at least by 20 days.

The consumer affairs ministry had sought comments from relevant stakeholders and had given them two weeks’ time--till July 6--to submit their inputs.

In a virtual meeting with some industry players on Saturday, the e-commerce firms told the government that there is a need to relook at the draft e-commerce rules for progressive regulation, sources aware of the matter told Business Standard. They raised concerns that in the current shape and form, the new rules are expected to have a negative impact on their business models.

The majority of associations including CII, Ficci, IAMAI, Nasscom, IBHA, USISPF asked for more time--till end of July--to submit a thorough representation. The aforementioned associations highlighted concerns. Individual participation by e-commerce companies was minimal and reached the government via associations for more time for submission.

“All the industry players unanimously wanted more time to understand the issue,” said a source about the meeting organised by the consumer affairs ministry and the government’s investment promotion arm, Invest India, with the industry executives

“Tata specifically asked for at least 20 days to understand the various rules that the government has put across and do the consultation. Other industry players also agreed to it.”

According to the sources, Tata was very vocal on related party aspects. Tata Sons executive Poornima Sampath requested for more time as she said that it will have a huge impact on brand Tata and they need time till the end of July to assess the impact of various clauses and give some serious inputs. The draft rules say that related parties can’t do any transaction in the marketplace.

“Which means Starbucks, which has a joint venture with Tata, can’t sell on Tata’s marketplace,” said the person. “Also, Amazon has an indirect stake in its sellers Appario and Cloudtail and they can’t sell on Amazon. Once you remove those big entities, the prices are going to shoot up. How is that going to benefit the consumers?”

A senior government official told Business Standard that the government is studying the comments from industry participants and will take a call regarding making relevant changes before the rules are finalized. The government is open to making changes in the proposed consumer protection rules, aimed at tightening the regulatory regime in the e-commerce space.

“Right now, we are looking at their response as well as the concerns raised by these companies. We will take a call accordingly,” the official cited above said.

Industry players also raised concerns about the definition of e-commerce where the proposed rules are saying that anyone who helps in logistics or fulfilment, should also be considered an e-commerce player.

“However, Reliance said they welcome the change and appreciate the government’s concern and step in the larger interest of consumers,” said an industry official.

Another industry executive said that online and offline parity was also discussed. E-commerce is just 3-4 per cent of the overall retail in the country. “You want to put the regulation only on e-commerce and not 96 per cent of retail. For instance, if e-commerce players can’t do flash sales, why should offline retailers be allowed to do that,” the  official said.

All industry chambers invariably asked for more time and they all emphasised the overreach of this draft.

IAMAI said that the inventory is not controlled by e-commerce companies so how can they be liable for any sellers' disputes. Sellers should also be included in the liability clause.

According to Kazim Rizvi, Founding Director, The Dialogue, with the growing demand of the online marketplace and its increased role in the growth of the economy, it is incumbent upon the government to keep online and offline marketplace on the same pedestal. “The rules should be drafted in such a manner that it does not increase the costs of operation and cater to the needs of small businesses and consumers,” said Rizvi.

Experts said that the increase in liability and compliance burden may affect India’s position as an ideal place for global investments. Possibilities of regulatory overlaps with the CCI (Competition Commission of India) and other regulators could bring uncertainty and should be avoided in the draft rules. Experts said there is a need for enforcing stability and streamlining the policymaking process that can benefit this sector.

In a recent virtual roundtable, George Cheriyan, Director at global public policy think tank CUTS International said that the regulatory overlaps in the proposed amendment in the  rules must be mitigated. The focus should remain on ‘consumers’ in consumer protection legislations, Cheriyan said.