Why in the News?

The Commerce and Industry Ministry is in the final stages of formulating the proposed national e-commerce policy, and at this point, no additional draft policy will be released to solicit input from stakeholders.

Context:

• Electronic commerce (e-commerce) is emerging as a pivotal driver of India's economic growth and development.
• Estimates indicate that, with grocery and fashion/apparel leading the way, the Indian e-commerce sector is poised to reach a valuation of $99 billion by 2024, with projections soaring to $300 billion by 2030.
• Recognizing this immense potential, the government is diligently monitoring the evolving landscape of electronic business, calling for a regulatory framework to safeguard the interests of buyers, sellers, marketers, and distributors.
• In 2019, a draft National E-Commerce policy was drafted and made available to the public for scrutiny.
• In response to this draft policy, numerous foreign governments, including the United States, have submitted comments, highlighting concerns affecting U.S. businesses.
• In August 2023, the Department for Promotion of Industry and Internal Trade (DPIIT) conducted extensive discussions with representatives from e-commerce companies and domestic trade associations concerning the proposed policy.
• A government official noted that a consensus has been reached among the involved stakeholders regarding the proposed policy.

Key Highlights of the National E-Commerce Policy:

• On February 23, 2019, the Ministry of Commerce and Industry unveiled the draft National E-Commerce Policy (DPIIT 2019).
• Aim:
• The national e-commerce policy seeks to establish a regulatory framework that simplifies business operations within the sector.
• Boosting Exports:
• This policy recognizes the substantial export potential within India's e-commerce sector.
• Projections indicate that by 2030, India's e-commerce exports could range from 200 billion USD to 300 billion USD annually.
• Given the anticipated growth in global cross-border e-commerce exports, expected to reach 2 trillion USD by 2025, India aims to harness this opportunity.
• Regulatory Body and FDI:
• The possibility of creating a regulatory authority for the e-commerce sector is under consideration, though its implementation may require time.
• Local trade associations have been advocating for an empowered regulatory body to enforce e-commerce regulations and address violations.
• While 100% foreign direct investment (FDI) is
• permissible in the marketplace model, the inventory-based model does not allow FDI.
• Addressing Trader Concerns:
• Traders have voiced concerns regarding e-commerce rule violations, such as steep discounts and preferential treatment for specific sellers.
• The policy aims to clarify these concerns and enhance transparency in FDI regulations for e-commerce.
• Furthermore, the Consumer Protection (e-commerce) Rules 2020 and proposed amendments will align with the e-commerce policy to maintain consistency.
• Comprehensive Framework:
• The e-commerce policy will function as a comprehensive framework for the sector, ensuring harmony among various governing statutes.
• The sector is presently regulated by the FDI policy, the Consumer Protection Act of 2019, the Information Technology Act of 2000, and the Competition Act of 2002.
• The policy intends to streamline these regulations, creating an environment conducive to the e-commerce industry's growth.

Advantages Highlighted in the Draft E-Commerce Policy:

• Enhanced Information Provision: One notable strength of the draft e-commerce policy lies in its emphasis on comprehensive information provision.
• It mandates that firms furnish clear details about product specifications, images, return and exchange policies, payment methods, and grievance redressal procedures.
• This ensures consumers have access to transparent information, fostering a healthy e-commerce market.
• Clear Grievance Redressal Mechanisms: The policy advocates for the establishment of transparent grievance redressal mechanisms, including the appointment of nodal officers, specified timeframes, and defined processes.
• These measures benefit consumers by facilitating seamless pre- and post-purchase processes.
• Seller Transparency: The policy requires platforms to disclose seller information, including names, locations, and contact details.
• This transparency empowers buyers to engage with sellers beyond the confines of a platform if they choose to do so.
• Fair Data Use: Platforms are prohibited from exploiting the vast data at their disposal to gain an unfair advantage over sellers or exhibit preferential treatment among sellers
• This regulation plays a crucial role in safeguarding the welfare of sellers.

Criticism of the Draft E-Commerce Policy:

• Infringement on Other Ministries' Mandates: The proposed rules appear to encroach upon the mandates of other ministries.
• For instance, the 'fallback-liability' provision holds platforms responsible for any mis-spelling by third-party sellers, contradicting the Finance Ministry's FDI rules that limit platform inventory management.
• Additionally, it removes the immunity granted specifically to marketplaces under the IT Act.
• Redundancy in Regulatory Oversight: The Ministry of Corporate Affairs argues that rules addressing the abuse of competitive positions are unnecessary since the Competition Commission of India already oversees such matters.
• Restrictive Measures on Related Parties: The policy restricts related parties from engaging in commercial activities on platforms, with related parties defined as entities with common shareholders owning more than 5% or over 10% ownership.
• While well-intentioned, this clause may not align with regulatory objectives.

Mains Question:

• Examine the objectives of India's National E-commerce Policy about consumer protection and seller support. Analyze the criticisms and challenges posed by its potential impact on other ministries and restrictions on related parties. (15M)