Draft e-comm policy calls for 'equal treatment' of sellers by marketplaces

This is not the time that the government is emphasizing fair competition in the e-commerce space

Online retailers must refrain from adopting algorithms that result in prioritizing a select few vendors on their platforms, according to a draft e-commerce policy prepared by the department for promotion of industry and internal trade (DPIIT).

To promote fair competition, e-commerce operators will have to ensure 'equal treatment' of all sellers and vendors on their platform. Besides, they will have to put out transparent policies on discounts, while spelling out the basis of discount rates funded by platforms for different products and suppliers.

"In the interest of the Indian consumer, and the local startup ecosystem, the government will aim to ensure that there are more service providers available, and that network effects do not lead to creation of digital monopolies misusing their dominant market position," the draft policy said. Business Standard has seen a copy of the draft.

This is not the first  time that the government is putting emphasis on fair competition in the e-commerce space.

In December 2018, DPIIT had issued a clarification on the Press Note 2 comprising Foreign Direct Investment (FDI) guidelines. The note was aimed at tightening norms for online retailers, after the government received complaints against these platforms on how they were flouting the FDI policy by not only influencing product prices but also indirectly moving towards an inventory model. DPIIT had then said that Press Note 2 was issued for better enforcement of an earlier note that banned FDI in the inventory model of e-commerce.

Over the last few years, domestic traders' body such as Confederation of All India Traders (CAIT) have been urging the government to take action against e-commerce behemoths such as Amazon, Flipkart, alleging that they have been flouting the FDI policy norms by offering deep discounting and promoting preferential sellers, among others.

Over the next two weeks, starting March 17, DPIIT will also hold stakeholder consultation on FDI in e-commerce with the top etailers, traders' associations, industry bodies as well as various ministries.

Meanwhile, an inter-ministerial panel on Saturday deliberated on the revised draft e-commerce policy and a host of other issues, including ways to boost exports, handling data as well as meeting regulatory challenges.

The meeting was chaired by DPIIT secretary Guruprasad Mohapatra. Officials from government's policy think tank NITI Aayog, finance ministry, ministry of micro small and medium enterprises (MSME), ministry of electronics and information technology (MeitY) were also present at the meeting.

A senior government official told Business Standard that the draft will be finalized after a few more meetings. Thereafter, the department will seek the union Cabinet's approval.

"The primary objective of this policy is to ensure that a conducive environment is created for innovative and vibrant growth of the e-commerce ector, while ensuring that gains from growth, are accessible to all participants and that interests of consumers are well protected. This requires emphasis on not only promotion of e-commerce within the country, but also the need to address regulatory challenges, which the sector poses," it said.

According to the draft, the government will lay down principles for usage of data towards the development of any industry, e-commerce, consumer protection, national security, economic security and law enforcement. It will put in place adequate safeguards to  prevent misuse and access of data by unauthorized persons.

In order to ensure that e-commerce is not used to defraud customers, registration with an authority identified by government will be mandatory. "Government shall collect information from e-Commerce platforms to aid it in making necessary decisions," it said.