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Q 5- Analyse the effects of the government's laws constricting the e-commerce sector in order to protect local traders. (250 words)

Paper & Topic: GS III à Effects of Liberalization on the Economy, Changes in Industrial Policy and their effects on Industrial Growth


  • Model Answer:


  • Introduction:


  • The Consumer Protection (E-Commerce) Rules, 2020 were notified by the government about 11 months ago.
  • The Department of Consumer Affairs has proposed a package of broad modifications, ostensibly "to protect consumers' interests and support free and fair market competition."
  • The proposed revisions, according to the government, aim to increase transparency in e-commerce platforms and enhance the regulatory environment to combat pervasive unfair trade practises.


  • Body:


  • The following are the suggested amendments:


  • Appointment of a Chief Compliance Officer, a nodal contact person for 24x7 collaboration with law enforcement authorities, to guarantee compliance with the Consumer Protection Act, 2019 and Rules.
  • Officers to guarantee that their directives are followed and a Resident Grievance Officer to address consumer issues on the e-commerce platform have been recommended.
  • This will ensure effective compliance with the Act's and Rules' provisions, as well as strengthen the e-commerce entity's grievance redressal procedure.
  • Establishing a framework for every e-commerce entity to register with the Department of Promotion of Industry and Internal Trade (DPIIT) for the purpose of receiving a registration number that will be prominently displayed on the website as well as on the invoice of every order placed by the e-commerce entity.
  • E-commerce entity registration would aid in the creation of a database of genuine e-commerce entities and ensure that customers can verify the authenticity of an e-commerce company before transacting through their platform.
  • In order to protect consumers' interests, mis-selling of products and services by companies selling goods or services by intentionally misrepresenting facts about such goods or services has been forbidden.
  • To ensure that customers are informed of the expiration dates of the products they are purchasing on the e-commerce platform, all marketplace e-commerce companies must provide this information.
  • All inventory e-commerce companies must provide a best before or use-by date so that customers may make an informed purchasing decision.
  • To ensure that domestic manufacturers and suppliers on the e-commerce platform are treated fairly and equally.
  • It has been stipulated that if an e-commerce company sells imported products or services, it must include a filter system to identify goods based on nation of origin and recommend alternatives to give domestic goods a fair chance.
  • Fall-back liability provisions have been provided for each marketplace e-commerce entity to ensure that consumers are not harmed if a seller fails to deliver goods or services due to negligent conduct by such seller in fulfilling the duties and liabilities in the manner prescribed by the marketplace e-commerce entity.
  • It was discovered that there was an obvious lack of regulatory monitoring in e-commerce, necessitating immediate action.
  • With the rapid rise of e-commerce platforms, unfair trade practises by marketplace e-commerce firms engaged in manipulating search results to benefit particular vendors have come to light:
  • This includes giving some sellers special treatment, indirectly operating sellers on their platform, interfering with consumers' freedom of choice, selling goods that are about to expire, and so on.
  • By engaging in "back to back" or "flash" promotions, certain e-commerce organisations are limiting consumer choice.
  • This hinders an equal playing field, limiting customer options and raising prices.
  • The restrictions prevent e-commerce corporations from "manipulating search results or search indexes," among other things.
  • The guidelines also require the logistics service provider to not provide discriminatory treatment amongst sellers of the same category, which has been a long-standing demand from sellers and dealers.

  • Benefits of the proposed amendments:

  • The suggested revisions will increase the accountability of ecommerce enterprises' stakeholders.
  • The e-commerce companies must explain how they rate things in a way that consumers can comprehend, as well as provide transparency.
  • The fraudulent e-commerce operators can be countered with required registration with DPIIT for e-tailers.
  • E-commerce firms will be required to offer domestic alternatives to imported items.
  • Made-in-India products will benefit as a result of this.
  • The guidelines also safeguard consumers from deceptive advertising and unfair trade practises.
  • The draught guidelines demonstrate the government's growing desire to wield greater authority over all online sites.
  • The new e-commerce standards result in overregulation and the potential for rule interpretation ambiguity.
  • E-commerce has provided MSMEs with a wider audience to market their products, which has slowed growth and job creation in the previously booming ecommerce sector. The tightening of marketplace restrictions will deter these MSMEs from going online.
  • Enforcing many of these standards will almost certainly result in protracted court battles that will overload the judiciary.
  • Unless it is presumed that buyers are motivated by patriotism rather than value, the guidelines are unclear as to how identifying items based on "country of origin" will benefit domestic manufacturers
  • Stating that the revisions were not intended at traditional flash sales, the government stated that it was only targeting some organisations that were limiting consumer choice by engaging in 'back-to-back' sales where a seller did not have the capacity to fulfil an order.
  • The Government appears to be harkening back to an era of stringent controls in order to rectify flaws in its guidelines from last year.
  • Overregulation that leaves room for interpretative uncertainty has the potential to stifle growth and job creation in the e-commerce sector, which has been growing rapidly.
  • Steps to take/Conclusion:
  • Many of these rules will inevitably result in protracted legal battles, necessitating the strengthening of Arbitration, Mediation, and Conciliation (AMC) and other alternative legal remedies.
  • The government must resolve uncertainties that arise as a result of various ministries overseeing the e-commerce sector.
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