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Etailers see challenges in proposed new e-commerce policy

New Bill seeks to make operators liable for delivery of a fake or defective products

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Two potential developments in the making have rocked the Indian e-commerce industry over the past week or so. The first was the talks of a possible revival of the e-commerce policy that was earlier scrapped by the government. This was followed by the passing of the Customer Protection Bill 2018 by the Lok Sabha last Thursday.

The concern with the new e-commerce policy is that the government could be including specific rules and regulations aimed at putting an end to the predatory pricing strategy, heavy discounting and distributing freebies by the likes of Amazon and Walmart-owned Flipkart to lure shoppers on their respective e-marketplaces.

The draft e-commerce policy, under consideration by the government a couple of months ago, had proposed a sunset clause for predatory pricing policies by e-marketplaces. This included zero payment offers, flash sales and unlimited offers and it had plans to define such practices while also setting fixed norms for each. Media reports suggested that the Department of Industrial Policy and Promotion (DIPP) is putting together a fresh draft of the proposed e-commerce policy after the last policy faced heat from both companies and the civil society.

On Wednesday, tightening norms for e-commerce firms like Flipkart and Amazon, the government took a host of steps and barred them from selling products of the companies in which they have a stake. The commerce and industry ministry also prohibited e-commerce companies from entering into an agreement for the exclusive sale of products. "An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity," the ministry said.

Once the Rajya Sabha gives its green signal, the new Bill will become a law. Accordingly, every online business/ platform operator will have to abide by the prescribed rules or face the music if caught on the wrong side. The new Bill seeks to make e-marketplace operators and food delivery platforms liable for delivery of a fake, defective or substandard product or service to customers shopping/ ordering online. And if found at fault, it has made provisions to penalise or imprison the company management or promoters for the discrepancy of service.

Claiming to be just a platform to connect sellers with buyers, players in the e-marketplace and food delivery platform space are a worried lot. That's because they will not be able to shrug off their responsibilities anymore and will be made a party to the consumer complaints or issues arising while transacting on their respective platforms.

According to Bejon Misra, founder, Consumer Online Foundation (a consumer protection activists agency), once the new Bill gets enacted by the Rajya Sabha, it would be a completely new manifestation. "Earlier a person could go to the consumer court only when s/he faced a challenging situation and or suffered from buying a product or availing a service. Now, there can be a Suo motu case taken on any defective, substandard product or service provided in the marketplace by anybody," said Misra.

Online business operators see this as a major concern and a threat to their operations. However, consumer activist agencies are calling it a game changer of sorts giving more power in the hands of consumers and the government machinery.

In fact, Misra is of the view that the new law will be draconian for everyone involved in the manufacturing and distribution of consumer products be it FMCG, food, beverages, durables, electronics, automobiles, telecom and so on. "All this while these companies took consumers for granted. Making it draconian is the only way to streamline their operations and make it a serious and responsible play. No consumer goods company/etailer can take its consumers for a ride in any of the developed nations and the new law is making to ensure the same in India," he said.

The Consumer Protection Bill 2018 is expected to be tabled and hopefully passed in the Rajya Sabha during the ongoing winter session itself. The rules framed in the Bill will then decide the future course of online businesses/ platforms in India.

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