E-tail regulation might be split among 9 bodies

Each could handle a designated area, says note by consumer affairs ministry

To get over the ambiguity on regulation of the burgeoning e-commerce business, a note prepared for a committee of secretaries (COS) has designated nine departments in the government with specific areas and issues in the sector to handle and oversee.

E-commerce has become the fastest growing business in the country, coupled with blockbuster funding from domestic and foreign investors. It has also faced allegations of tax evasion and rule-breaking by major e-tailers.

The draft note, prepared by the ministry of consumer affairs, earmarks responsibility to each ministry or department on the area of regulation they would oversee for e-commerce companies. Thus, taxation-related issues will be regulated by the department of revenue. The Reserve Bank of India will monitor only issues involving foreign exchange and banking issues. The ministry of corporate affairs would look into all allegations and complaints about predatory pricing, unfair trade practice and criminal fraud.

SUPERVISING E-COMMERCE

• Taxation could be looked after by the department of commerce
• RBI to monitor foreign exchange and banking issues
• Consumer grievances and consumer protection to be under the ministry of corporate affairs

Many traditional retailers and consumer goods companies have complained that online retailers are involved in predatory pricing, selling below cost of acquisition to destroy their business. The lack of licensing, the draft note argues, has made monitoring and supervision of e-retailing difficult.

Issues regarding foreign direct investment (FDI) and policy on e-commerce would be under the ministry of commerce, department of industrial policy and promotion. Amazon.com, for one, has been lobbying for the relaxation of FDI norms for its business to consumer line. Presently, no FDI is allowed here.

Issues of data protection and cyber security would be handled by department of electronics and information technology. There has been a move by the government to ask e-retailers to set up data centres in the country, citing loss of business as most of these are located outside India.

Advertising and guidelines would be handled by the ministry of information & broadcasting. Especially as e-commerce companies have become one of the largest advertisers, on television, print and the net, and are known for their aggressive stance. It has been observed that many of the rules governing the print and broadcasting business cannot be applied on internet advertising because of the relative anonynomity of the business.

The ministry of consumer affairs has contended the operations of e-commerce are too diverse and complex to be under the purview of one ministry or department. Therefore, what is needed is clear demarcation of related activities, to be handled by different departments or ministries.

The ministry says it would oversee all issues regarding consumer grievances and consumer protection. However, there is need for clarity in defining 'internal trade', especially with regard to e-commerce activities to be handled by department of consumer affairs.

E-commerce in India was valued at $3 billion in 2014 and is expected to swell to $15 billion in two years.

Flipkart had fuelled a controversy when it unveiled a 'Big Billion Day' sale late last year, leading to complaints from consumers and allegations of predatory pricing. This led to traditional retailers lobbying against the online ones.

American giant Amazon has been facing scrutiny from state tax departments over the warehouses that store products from various sellers listed on it. Recently, reports surfaced of Flipkart and Amazon also being targeted for alleged tax evasion in Kerala.