The government wants to introduce penalties on e-commerce portals that violate the rules being framed for regulating online business in the retail sector. These are going to be called the Consumer Protection (e-commerce) Rules, which are currently awaiting public feedback for which the deadline is December 2. Some more facets like the penalties will also get added, as per a report in the Economic Times. These will take largely on the existing rules on Food Safety and Packaged Commodities and modify them to apply on the online trade.
The government has been receiving complaints from traders and consumers on many of these internet-based companies both in the products and services category. There is no proper legislation currently available to haul these ventures to court and hold them accountable.
The government did warn Amazon and Flipkart against violating FDI norms. But there are other e-commerce firms engaged in online retail which may be engaged in similar practices like deep discounting and favouring certain sellers on their platforms etc. Taking all these into consideration, the government is trying to put together a comprehensive legislation to tackle all possible scenarios.
Apart from penalties, the government is also looking to expand the definition of e-commerce in the draft rules, to include a larger set of companies.
Online services such as ticketing, cab-hailing, food ordering and home services will reportedly be included as well so that internet companies apart from e-commerce players can also be included. By expanding the definition, the government wants to include companies such as MakeMyTrip, Ola, Uber, Swiggy, Zomato, UrbanClap and several others.
In addition, the rules will also bring under its ambit single brand entities such as H&M, Xiaomi and Patanjali.
The Ministry of Consumer Affairs is the nodal ministry that will pilot the bill while collecting inputs from different ministries. The Department for Promotion of Industry and Internal Trade, DPIIT will also be involved. The MCA has released figures on complaints it has been receiving at the Ministry. It says around 20% of these complaints relate to online firms and Flipkart, Reliance Jio and Amazon are, in that order, figure in the top three in terms of complaints.
The only exception from this exercise will be the B2B online firms.