Centre mulls changes in draft e-commerce rules, give clarity on flash sales

Revised norms will clear ambiguity on proposed amendments, say officials

The Centre is considering changes to the consumer protection rules on e-commerce that may include redrafting related party sales and clarity on flash sales, after consultation with industry and e-commerce players.
 
Government officials said the revised rules will be notified soon, and will clear ambiguities on the proposed amendment that are aimed at further tightening the regulatory regime of the e-commerce space in India.
 
Last month, industry associations such as Confederation of Indian Industries, Retail Association of India (RAI), Confederation of All India Traders (CAIT), Internet and Mobile Association of India (IMAI), PHD Chamber of Commerce and Industry, among others, as well as e-commerce companies, including Amazon and Flipkart, sent their response to the draft policy that was put out for public consultation on June 21.
 
They have also had virtual meetings with the consumer affairs ministry and the government’s investment promotion arm, Invest India in July.
 
The final draft is expected after Parliament session gets over later this week.
 
“There will be a rewording of some of the rules. Industry participants have also shared their concerns and views with the consumer affairs ministry. The nuances will be revealed in the final draft, giving them more clarity on the policy,” a senior government official told Business Standard.
 
According to the proposed rules, e-commerce companies will not be allowed to organise a flash sale where goods or services are sold at a significantly reduced prices and high discounts.
 
The final rules are expected to give clarity on issues such as what constitutes flash sales, finer details and issues regarding appointment of resident grievance officers, among others.
 
While the government has maintained that rules aim to protect the interests of consumers and make e-commerce companies more accountable and responsible, some sections of the industry are worried about changes in their business structure if the rules were to be implemented in the current shape.
 
Industry players have raised concerns and have urged the government to change the clause that says related parties cannot do any transaction in the marketplace.
 
They have also raised their concerns regarding the definition of e-commerce where the proposed rules state that anyone who helps in logistics or fulfilment, should also be considered an e-commerce player.

In its written submission to the consumer affairs ministry, RAI, which welcomed the draft rules, has suggested that the definition of “inventory e-commerce entity” and of “marketplace e-commerce entity” must be amended to clearly stipulate what is allowed and what is not for both modes of e-commerce.
 
PHD Chamber of Commerce and Industry has also submitted similar views. RAI has also suggested some changes in the rules pertaining to flash sales. “A reading of this provision makes it amply clear that such a provision will only be applicable to marketplace entities because of multiple third-party sellers on the platform. We would, therefore, like to suggest that the provision of flash sales shall be applicable to e-commerce entities, if these are done in a non-fraudulent manner,” RAI said.
 
Associations such as IAMAI in its written submission said that implementation of the amendments in current form will significantly increase the compliance burden on small businesses as well as for start-ups who are not even in the e-commerce business, but provide services to e-commerce. It has also suggested that the proposed amendments exclude digital businesses that are already being governed by robust consumer protection norms and grievance redressal proce dures under parallel regulations.
 
However, any change in the “country of origin” clause is unlikely. According to the current draft, country of origin norms for e-commerce players will be tightened to push the sale of locally produced goods on their platforms. Towards this, e-tailers cannot mislead consumers by manipulating search results on their platforms. They will have to ensure that marketplaces do not use any information collected through its platform for unfair advantage of its associated enterprises.