Draft e-commerce guidelines: Industry dept objects, Niti Aayog chief says will hit ease of enterprise

Key provisions of the Central Government’s draft ecommerce guidelines have been stridently opposed by the Industry division and Corporate Affairs ministry — and the Niti Aayog vice chairman who has warned that they “will severely harm Ease of Doing Business and impact small businesses”, information obtained by The Indian Express beneath the Right to Information (RTI) Act present.
Records present that the Department for Promotion of Industry and Internal Trade (DPIIT) has flagged a number of anomalies, questioned some provisions and steered remedial tweaks in an workplace memorandum despatched to the Department of Consumer Affairs, which had issued the draft guidelines in June.

These embrace an examination of proposals such because the fallback legal responsibility of sellers, the proposed ban on flash gross sales, and the necessity for definitional readability of phrases, equivalent to “cross-selling” and “mis-selling” within the draft guidelines.
Incidentally, Union Minister Piyush Goyal is in command of the Ministry of Consumer Affairs, Food & Public Distribution, which issued the draft guidelines, in addition to the Ministry of Commerce and Industry, beneath which the DPIIT falls.

Further, in a letter to Goyal on July 6, Niti Aayog vice chairman Rajiv Kumar identified that the proposed e-commerce guidelines go “far beyond consumer protection” and “will severely harm Ease of Doing Business and impact small businesses”.
The Ministry of Corporate Affairs, too, has opposed particular provisions of the draft guidelines whereas the Finance Ministry is learnt to have raised crimson flags.
Apart from “fall back liability”, a key portion of the draft that has come beneath fireplace from inside the Government are the modifications proposed beneath “duties of sellers on marketplace, inventory e-commerce entities”.
In its workplace memorandum, dated July 18, the DPIIT stated: “The concept of ‘fall back liability’ may be examined in view of Product Liability provision as per Section 2(34) and Chapter VI of the Consumer Protection Act 2019. It may be evaluated if introduction of a new concept of ‘fall back liability’ is necessary in view of existing legal provisions. The definitions of Cross Selling, Miss-selling and Flash Sale may be reexamined. These concepts are addressed under the ethical and responsible e-Commerce. It may be examined whether introduction of these new concepts is required”.
DPIIT and the Department of Consumer Affairs didn’t reply to follow-up queries emailed individually by The Indian Express.

According to the Consumer Protection Act, 2019, product legal responsibility is outlined as “the responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services”.
This, together with the Chapter VI of the Consumer Protection Act, lays the accountability of the faulty product on the vendor or the producer. However, the proposed e-commerce guidelines, that are being notified as a part of the Consumer Protection Act, make on-line marketplaces liable for any shortcoming in merchandise delivered via their platforms.
Industry gamers have additionally identified that whereas the FDI coverage prohibits firms equivalent to Amazon and Flipkart from having management over stock offered on their platforms, the e-commerce draft guidelines holds these platforms liable in case a vendor fails to ship items or providers as a result of negligent conduct, which causes loss to the client.
The DPIIT has steered that duties of sellers on market, stock e-commerce entities could also be aligned with the framework in Draft National e-Commerce Policy. “The objective is to prevent sellers from engaging in any type of activities that result into market distortion,” it famous.
The DPIIT has additionally referred to as into query the outright banning of flash gross sales. While the division has stated that ideas equivalent to cross-selling, mis-selling and flash gross sales “are addressed under the ethical and responsible e-commerce”, a Gurugram-based retail sector analyst has stated {that a} blanket ban on flash gross sales seems to “blatantly limit consumer choices”.
In addition, the DPIIT has referred to as for start-ups and MSMEs to be exempted from compliance of the brand new e-commerce guidelines.
Last month, The Indian Express had reported that the Department of Consumer Affairs is revisiting a number of the provisions proposed in its draft e-commerce guidelines following a pushback from the trade and sections of the Government.
The Ministry of Corporate Affairs, in an workplace memorandum dated July 22, identified the overlap between a number of the proposed provisions and the Competition Act. It has stated that because of these provisions “consumers may be prompted… to bring cases of abusive conduct against dominant enterprises before consumer fora…”.
“This will create a fertile ground for forum shopping besides regulatory overlaps, thereby resulting into a potential scenario of divergent rulings,” it added.
Centre’s think-tank Niti Aayog has additionally echoed considerations of overlap with current legal guidelines and laws. In a July 14 memo, Niti Aayog stated: “The proposal restricting the listing of related parties on e-commerce platforms appears to be a case of overreach.”
Separately, Niti Aayog Vice Chairman Rajiv Kumar wrote in his letter to Goyal: “In the post pandemic recovery period, it is necessary to give a major impetus to MSMEs, small businesses through e-commerce utilising the strength of digital India. The draft Rules would adversely impact the recovery rate”.

However, in its letter, the Ministry of Micro, Small and Medium Enterprises stated it “supports the proposal contained in the proposed amendments to the Consumer Protection (E-commerce) Rules, 2020”.
The Ministry of Electronics and Information Technology (MEITY) referred to as for alignment between the proposed e-commerce guidelines and the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules notified in February.
“The “e-commerce entity” being an middleman in nature is anticipated to look at due diligences as prescribed within the stated IT Rules, 2021. E-Commerce entities are intermediaries as outlined within the IT Act and they’re required to observe IT Rules, 2021. Thus a parity must be introduced with IT Rules,” it wrote.