E-COMMERCE – PRINCIPLES AND GUIDELINES FOR

E-Commerce – Principles and Guidelines for Self-Governance’ – economy

NEWS: The government has released draft guidelines prepared by the Bureau of Indian Standards (BIS) to ensure consumer protection, transparency, and fair practices in the e-commerce sector.

  • These guidelines aim to establish a framework for self-governance among e-commerce entities, addressing challenges such as counterfeit goods, data protection, and unfair practices.

 

WHAT’S IN THE NEWS?

E-Commerce Market in India

  1. Market Growth:
    • India’s e-commerce market is projected to reach $363.30 billion by 2030, driven by rapid digitalization and an expanding consumer base.
  2. Retail Share:
    • E-commerce currently constitutes 7% of the total retail market, indicating significant room for growth as digital penetration increases.
  3. Global Shopper Base:
    • By 2030, India is expected to have the second-largest online shopper base globally, with an estimated 500 million shoppers, highlighting the growing consumer trust in online shopping.
  4. Growth Drivers:
    • Factors contributing to this growth include:
      • Increased Internet Penetration: Expanding access to affordable internet services across urban and rural areas.
      • Rising Affluence: Growing disposable income among middle-class households.
      • Affordable Data Prices: Competitive pricing for mobile data services, making online platforms more accessible.

 

Key Provisions of the Draft Guidelines

  1. Pre-Transaction Verification:
    • E-commerce platforms must conduct thorough Know Your Customer (KYC) checks for sellers, particularly third-party sellers.
    • Sellers’ identity details, legal entity names, contact information, and business addresses must be verified to ensure authenticity and prevent fraud.
  2. Detailed Product Listings:
    • Sellers are required to provide comprehensive product information, including:
      • Product title, images, and specifications.
      • Shipping methods and delivery timelines.
    • This ensures consumers make informed decisions based on accurate and complete information.
  3. Transparent Contract Terms:
    • Emphasis is placed on clear and transparent contract terms, which must include:
      • Product descriptions and price breakdowns.
      • Return, refund, and replacement policies.
      • Safety warnings, ensuring consumer awareness of potential risks.
  4. Secure Payments:
    • Platforms must implement robust security measures for online payments, including:
      • Encryption and two-factor authentication to protect user data.
      • Diverse payment options, such as credit/debit cards, mobile payments, e-wallets, and bank transfers, to cater to varying consumer preferences.
  5. Timely Refunds and Returns:
    • Clear timelines must be established for:
      • Refunds, replacements, and exchanges.
      • Resolving issues related to counterfeit or defective products, ensuring consumer grievances are addressed promptly.
  6. Consumer Reviews and Ratings:
    • Reviews and ratings must comply with IS 19000:2022 standards, which regulate their collection, moderation, and publication.
    • This ensures authenticity, preventing fake reviews and manipulation.
  7. Data Protection:
    • Adherence to data protection regulations is mandatory, ensuring personal data collected from consumers is:
      • Used solely for disclosed purposes.
      • Protected against misuse and unauthorized access.
  8. No Preferential Treatment:
    • The guidelines prohibit platforms from favoring certain sellers or service providers, ensuring:
      • A level playing field for all stakeholders.
      • Policies to prevent the sale of counterfeit goods and promote fair competition.

 

E-Commerce Models in India

  1. Business-to-Consumer (B2C):
    • Platforms like Amazon, Flipkart, and Myntra operate under this model, where businesses sell directly to consumers.
  2. Business-to-Business (B2B):
    • Relevant for industries such as manufacturing, where businesses procure raw materials, machinery, and other supplies.
    • Platforms like Udaan and Alibaba cater to this model, facilitating bulk transactions.
    • 100% FDI (Foreign Direct Investment) is allowed in B2B e-commerce, encouraging global participation.
  3. Consumer-to-Consumer (C2C):
    • Platforms like OLX and Quikr enable peer-to-peer transactions, where individuals list and sell their items directly to other consumers.
  4. Business-to-Administration (B2A) and Consumer-to-Administration (C2A):
    • The Government e-Marketplace (GeM) serves as an example of a B2A platform, facilitating procurement of goods and services for government departments.

 

Other Steps by the Government

  1. Digital India Program:
    • Promotes the adoption of digital technology across sectors, enhancing e-commerce penetration and digital literacy.
  2. Goods and Services Tax (GST):
    • The GST framework simplifies the tax structure, creating a unified market for e-commerce and reducing logistical complexities.
  3. The national e-commerce policy aims to establish a regulatory framework that facilitates ease of doing business in the sector.
  4. Boosting Exports:
    • The policy recognizes the significant export potential of India's e-commerce sector.
      • By 2030, India's e-commerce export potential is estimated to range between 200 billion USD to 300 billion USD annually.
      • With global cross-border e-commerce exports projected to reach 2 trillion USD by 2025, India aims to capitalize on this growth opportunity.
  5. Regulatory Body and FDI:
    • The possibility of establishing a regulator for the e-commerce sector is being considered, but its implementation may take time.
    • Local traders' associations have been advocating for an empowered regulatory body to enforce e-commerce rules and curb violations.
    • While 100% foreign direct investment (FDI) is allowed in the marketplace model, FDI is not permitted in the inventory-based model.
  6. Addressing Trader Concerns:
    • Traders have expressed concerns regarding the violation of e-commerce rules, such as deep discounts and preferences given to select sellers.
    • The policy intends to clarify these issues and provide greater transparency in the rules governing FDI in e-commerce.
    • The Consumer Protection (e-commerce) Rules 2020 and proposed amendments will be aligned with the e-commerce policy for consistency.
  7. Comprehensive Framework:
    • The e-commerce policy will serve as an overarching framework for the sector, ensuring coherence among various governing acts.
      • The sector is governed by the FDI policy, the Consumer Protection Act, of 2019, the Information Technology Act of 2000, and the Competition Act, of 2002.
    • The policy aims to streamline these regulations and create a conducive environment for the growth of the e-commerce industry.
  8. Open Network for Digital Commerce (ONDC):
    • A decentralized platform aimed at reducing the cost of doing business for retailers, increasing market access, and fostering innovation.
  9. Government e-Marketplace (GeM):
    • Promotes transparency and efficiency in public procurement.
    • Encourages participation from small and medium enterprises (SMEs), making government procurement more inclusive.

 

Concluding Remarks

  1. Focus on Self-Regulation:
    • The draft guidelines emphasize self-governance among e-commerce platforms, reducing reliance on regulatory enforcement.
  2. Consumer Protection and Transparency:
    • Measures such as secure payments, accurate product listings, and timely refunds aim to build consumer trust and enhance their experience.
  3. Addressing Sector Challenges:
    • The guidelines aim to tackle issues like counterfeit products, data misuse, and unfair practices, ensuring a fair and competitive marketplace.
  4. Sustainable Development:
    • With India’s rapid e-commerce growth, these measures contribute to the sustainable development of the digital economy, supporting long-term growth and inclusiveness.

 

Source: https://www.thehindu.com/business/Industry/government-issues-draft-rules-to-make-e-commerce-more-accountable-seeks-comments-by-february-15/article69124049.ece