Traders' body calls for introducing a regulator for e-commerce sector

CAIT says currently different e-commerce entities being regulated by different entities, resulting in a piecemeal approach and causing confusion among various stakeholders

Domestic traders' body Confederation of All India Traders (CAIT) has called for setting up of a ‘specialised regulator’ for the e-commerce sector to protect the interests of small businesses and traders.

According to the traders’ body, different e-commerce entities are currently being regulated by different entities, resulting in a piecemeal approach and creating confusion among various stakeholders.

Considering rapid growth of this sector and its unique sectoral issues CAIT has suggested the setting up of a regulator under the e-commerce policy that is being finalised by the government.

“Owing to the technicality of e-commerce platforms, and the web of several stakeholders with different concerns, it is desirable to have such a regulator to implement the inclusive e-commerce policy, which would have ex ante regulations to be applicable in e-commerce segment, for the benefit of the entire ecosystem,” CAIT secretary general Praveen Khandelwal said while releasing a white paper on e-commerce on Tuesday.

He said the regulator should direct marketplaces to not provide any discounts as it has an effect of being ‘discriminatory’ and ‘distortionary’.

Currently, the e-commerce space is governed by Foreign Direct Investment Policy, Competition Act, 2002, Consumer Protection Act, 2019 and E-Commerce Rules, 2019, Information Technology Act, 2000.

The white paper contains a set of 27 recommendations for the government to be incorporated in the proposed e-commerce policy and nine recommendations for the amendments planned under consumer protection rules on e-commerce.

The government must address the concerns emanating from lack of platform neutrality, excessive discounting, unfair usage of data. “The e-commerce policy should give a due weightage to aforementioned concerns while formulating the way ahead for the industry,” the white paper said. It also said that the e-commerce policy should direct marketplaces to not provide any discounts as it has an effect of being ‘discriminatory’ and ‘distortionary’.

The release of the white paper comes in the backdrop of the government in the process of finalising the ecommerce policy. The industry department is holding inter-ministerial consultations for the national e-commerce policy that will spell out the responsibilities of marketplaces, sellers, and ensure that consumers are able to take an informed decision before purchasing a product. The Consumer affairs ministry had proposed another set of guidelines for etailers in June last year. While the ministry has completed stakeholder consultation, rules are yet to be finalized.

Interestingly, both set of rules are yet to be rolled out by the respective government departments. Any change in policy or an introduction of a new rule or a policy, have faced criticism for adding to the compliance burden for e-commerce companies or being too harsh. In fact, about a year ago, DPIIT had internally proposed creation of a regulator for the e-commerce sector, which was rejected by most ministries during inter-ministerial consultation.

According to CAIT, e-commerce is presently dominated by a few big platforms and a few big sellers, who are generally affiliated to the platforms. This often puts smaller sellers in a disadvantageous position as it reduces their visibility in the market. Although the market size of e-commerce has grown, the small sellers have not seen the benefits at the same pace. Therefore, it is important to formulate a policy for e-commerce with a focus on all the stakeholders, it said.