It’s the small vs big argument as industry bodies propose relaxations in draft e-commerce rules

Industry bodies which represent e-commerce companies like Amazon, Flipkart, Ola, and Nykaa have called for significant relaxations to India’s proposed e-commerce consumer protection rules. And a domestic trade body which represents the local trading industry has asked the Consumer Affairs Ministry to modify the rules to set different compliance standards for large and small e-commerce businesses. 

The Internet and Mobile Association of India (IAMAI), which counts Amazon and Flipkart as its members, has submitted to the Consumer Affairs Ministry that the proposed e-commerce rules should do away with the “fall back liability” provision saying that it “dilutes the intermediary safe harbour under the provisions of the IT Act”. 

The draft rules, which were published last month, had introduced the concept of fall-back liability under which e-commerce companies can be held liable in case a seller on their platform fails to deliver goods or services due to negligent conduct which causes loss to the consumer. 

The IAMAI however said that the liability provision could be diluted and be applied to inventory model e-commerce businesses since they own and manage the goods sold on their platform. 

The Consumer Affairs Ministry had called for comments from industry stakeholders on the proposed rules, the deadline for which was July 21. The rules had come amid increased friction between the government and e-commerce giants Amazon and Flipkart as local trade bodies had accused them of violating Indian laws.

A source at a large e-commerce company separately told Entrackr that the rules in their current form would require e-commerce companies to undergo significant restructuring in their organisational structure. 

Another industry body, IndiaTech, which has Ola, Nykaa, MakeMyTrip, Policybazaar, and Dream11, among others as members, called for more clarity around the applicability of these proposed rules and called for exempting service providers like cab-hailing, travel, gaming, and insurance from the ambit of the rules. 

IndiaTech also said that the proposed amendments will, by default, cover several ‘smaller’ entities as well, for whom many of the compliance requirements could be burdensome and add to costs. The Swadeshi Jagran Manch (SJM), which is an affiliate of the RSS, echoed similar sentiments. 

Entrackr has seen a copy of the individual submissions made by these organisations.

One such provision that IndiaTech highlighted was a provision which prohibits e-commerce companies from listing products of related parties and enterprises. 

“This basically is a situation where if a bakery goes online and sells its products using its own brand name or a manufacturer of products goes online, it may lead to a restriction of selling their own products and force them to sell on other platforms,” IndiaTech said. 

Similarly, this could also prohibit larger e-commerce companies from selling several goods on their platform, IndiaTech said. It illustrated that under this provision, a platform like BigBasket would not be allowed to sell Tata branded salt since the latter has acquired a majority stake in the e-grocer. 

Swadeshi Jagran Manch (SJM) suggested that the proposed rules should also consider traders and service providers who avail services through e-commerce companies for commercial purposes as a consumer. 

“Small traders (on Amazon, Flipkart-Walmart), drivers on Uber, Ola etc. and small restaurants involved in Zomato etc., hairdressers, carpenters, electricians etc. on Urban Clap etc. and many other workers are subject to severe hardships by these E-Commerce giants, having no protection, at all, against exploitation,” SJM said in its submission. 

SJM, while welcoming the proposed requirement to register e-commerce with the government, said that small e-commerce companies should be exempted from the provision. Instead, the government should prescribe a minimum threshold for compulsory registration and the definition of an MSME may be adopted to define small e-commerce companies, SJM said.