Regulating e-commerce: Complaints and regulations along with big leap forward

The year gone by could easily be termed as the year when e-commerce in India took its giant leap with millions of consumers logging in to the e-route for their purchases - from the usual favourites like apparel, electronics and books to even houses and cars. This was preceded by a series of blockbuster funding and acquisitions, mostly by big boys of the rising industry in India. But then, with exponential growth comes hurdles in an industry, still pegged at less than a per cent in size compared to the neighbouring Chinese market. It is more likely that the rising concerns on several fronts would result in clearer regulatory framework for the e-commerce industry in 2015.According to estimates by Internet giant Google, the value of India's swelling e-commerce business is estimated to propel from $20 billion in 2015 to $70billion by 2020.

However, the sector has also come under the glare of regulatory authorities with alleged consumer and trade grievances around issues such as selling of fake products, offering of massive discounts, allegations of dodging of taxes by marketplace players, and not following regulatory mechanisms for online payment, among others.

WHAT TO LOOK OUT FOR

• E-commerce companies will continue to attract consumers and investors
• There will be increased scrutiny of e-commerce businesses by regulatory authorities  
• E-commerce industry has to engage with governments — both at the state-level and at the Centre — to mitigate any adverse impact of uncertain regulations

India's competition watchdog, the Competition Commission of India, is checking if there is a case for investigating consumer grievances related to alleged false offers made by some big-ticket e-tailers during a widely-advertised sale. Massive discounts offered by some e-tailers during such sales have also riled many brick-and-motar players. The Reserve Bank of India also joined the bandwagon when the US-based taxi operator Uber was seen flouting payment norms a few months ago - it apparently wasn't following RBI's two-step user authentication norm. With the apex banking regulator planning fresh payment-related guidelines for e-commerce players, there are strong signals that other regulatory authorities may join the fray, feel sector analysts. The government, too, is learnt to have set up a committee, with representatives from the finance and commerce ministries, to devise a clear mechanism for the e-commerce sector. Executives from e-com majors such as Amazon, Flipkart and Snapdeal have had meetings with officials in various government departments last year to iron out the existing regulatory issues.

"While the government's intent is plausible, it won't be easy to come up with regulatory moves with regards to the foreign direct investment in online commerce," says Mohit Bahl of KPMG India. Some of the established e-commerce players have already started enjoying the marketplace model and further clarity in that area could give a boost to the sector in India, he adds. At the same, time government agencies across states are currently grappling with regulatory issues surrounding the e-commerce businesses - on issues as diverse as taxation, pricing, payment process, registration of businesses, accountability and liability for goods and services offered, among other things.

US-based Amazon in particular has been facing a lot of ire from Karantaka state tax department over tax payment.

In order to build the market, most of e-commerce companies have doled out a lot of freebies to lure in consumers despite those moves hurting the financial health of these companies. But e-com companies would have to step up their spend on legal and regulatory matters with the government and its various agencies upping the ante to plug the regulatory gaps and tweak existing regulations to cover the burgeoning e-commerce sector. It makes sense for the nascent e-commerce industry to engage with governments - both at the state-level and at the Centre - to mitigate any adverse impact of uncertain regulations.