States, mostly those ruled by non-BJP parties, have raised concerns that the new set of e-commerce rules proposed by the Union Consumer Affairs Ministry to check mis-selling and fraudulent discounts. They fear there could be a negative impact on jobs and market access for MSMEs created by various digital platforms in recent years.
The draft amendments propose banning of fraudulent flash sales and mis-selling of goods and services on e-commerce platforms. Ban on misleading users by manipulating search results, and appointment of chief compliance officer and resident grievance officer are some of the other amendments being proposed. E-commerce entities are also required to provide information not later than 72 hours of the receipt of an order from a government agency for prevention, detection and investigation and prosecution of offences under any law, as per the proposed amendments.
The state governments plan to suggest, as per PTI, strong safeguard measures in the proposed rules to ensure that any changes in the Consumer Protection (E-Commerce) Rules, 2020 do not hamper their economic growth engines and revenue collections. Officials said it would be kept in mind that their suggestions do not come in the way of the proposed rules enhancing the overall consumer protection framework.
They said it is a sensitive matter that needs to be tackled carefully as protecting consumers’ interest is as important as safeguarding jobs, MSMEs and lakhs of self-employed individuals including artisans, weavers, and those in agriculture and allied sectors who have been benefitting immensely from the growth of the e-commerce sector. The officials said formal suggestions on the draft rules would be made to the Centre, which has invited suggestions till July 6, would be made after deliberating all the issues and after consulting all stakeholders.
A large number of foreign and domestic investors and other business entities, who have either invested in various e-commerce platforms or are doing business with them, are also said to be wary of certain proposed rules, including on fall-back liability, flash sales or deep discounting and data sharing. Their apprehensions include greater liabilities for online retailers for goods and services sold on their platforms, which could also impact the ability of e-commerce players to raise funds going forward and may prompt existing and prospective investors to put in place additional measures to safeguard their returns.
Major e-commerce players such as Amazon and Walmart/Flipkart, as also some industry bodies, are also likely to submit their views on these proposals soon. A senior official said there is a view that the proposed rules can disturb the state’s business ecosystem, especially with regard to MSMEs and small entrepreneurs and will also limit the choices for consumers, rather than safeguarding their interest.
He said MSMEs contribute almost two-thirds of the annual revenues generated on just two major platforms – Amazon and Flipkart, and that itself runs into thousands of crores of rupees, while there is a big chain involved comprising of businesses, self-employed individuals, warehouses, farmers etc. and these platforms have created lakhs of jobs in recent years.