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ADIF welcomes Govt’s credible step towards removing predatory e-commerce practices​​


The Alliance of Digital India Foundation (ADIF) considers that the proposed amendments to the Consumer Protection (E-Commerce) Rules, 2020, will protect consumer interests in the long run. There is a strong emphasis on eliminating discrimination of Indian sellers and manipulation of customers and the market by larger e-commerce players.

The Consumer Affairs Ministry had released the draft e-commerce rules under which it proposes to ban fraudulent flash sales and the mis-selling of goods and services on e-commerce platforms, among other things.

In suggestions submitted to the ministry, ADIF agreed with the ministry that “flash sales and instant discounts are bad for the market in the long run.” The organization said that discounts are mostly offered on slow-moving and perishable inventory holdings. Deep discounting could kill good and/or competing products. “While larger players can resort to such tactics and survive to create market dominance, smaller players will not be able to afford these discounts for longer periods and will bleed out of existence”, it said.

ADIF supports the government’s intent towards protecting the small and medium sellers. However, the rules tend to miss the mark on ensuring friendliness for small and medium players. Solopreneurs and women entrepreneurs, especially, merit special consideration and attention. ADIF advocates zero paperwork for them up to GST threshold (20L) and minimal compliance requirement for all sellers at least till 1Cr of revenue.

ADIF said that smaller e-commerce entities will find it difficult to appoint three separate people as Chief Compliance Officer, Nodal Contact Person and Resident Grievance Officer. It has suggested that until the DPIIT registrations are completed, the founders should be given permission to act as the above officers of the company. Up to a certain turnover, e-commerce entities should have the flexibility to nominate one person who can act as Nodal Contact Person as well as Chief Compliance Officer and Resident Grievance Officer.

On cancellation charges imposed by e-commerce entities, the foundation said that these charges should be imposed by e-commerce entities (when a customer cancels an order) only if the e-commerce entity will also provide similar cancellation charges when cancellation is done by the seller or e-commerce entity.

“However, e-commerce entities may be exempt from this rule in cases where the cancellation charges are levied by sellers and e-commerce entities are only passing on the charges to the customer”, said Sijo Kuruvilla George, Executive Director, Alliance of Digital India Foundation.

In its suggestions, the ADIF has urged the ministry to re-examine the provision of fall-back liability on marketplace e-commerce entities. “This liability provision defeats the very principle of safe harbour rule which acts as a protection to intermediaries under Section 79 of the IT Act.”

While lauding the proposed amendment concerning information collected through e-commerce platforms for the unfair advantage of their related parties and associated enterprises, ADIF said that it is a great step towards protecting sellers from market erosion risks from large e-commerce entities. However, it cautioned that more deliberation is needed to create provisions to protect the interests of Indian marketplace entities which have invested in associated parties or private labels.

​​Overall, in proposing these rules, ADIF strongly recognises the government’s intent to empower citizens, push the growth of local SMEs and restrict abuse of dominant position, thus creating a conducive environment for the growth of customer-centric e-commerce ecosystem in India.

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