Protecting e-comm consumers | Gist of Rajya Sabha TV / RSTV (now Sansad TV) - UPSC PDF Download

Introduction:

Every year, 24th of December is observed as National Consumer Day. On this day, the Consumer Protection Act, 1986 had received the assent of the president. The enactment of this Act is considered as a historic milestone in the consumer movement in the country. The National Consumer Day presents an opportunity to highlight the importance of the consumer movement, the need to make people aware of their rights as consumers, and to ensure consumers with effective safeguards against different types of exploitation such as defective goods, deficiency in services and unfair trade practices. Especially in this age of e-commerce, which is facilitated creation of new approaches to service and product delivery, the challenges of ensuring customer protection have grown manifold. How are the interests of e-commerce consumers being protected, how is free and fair competition in e-com market being encouraged and how are redressal mechanisms for consumer grievances being strengthened.

E-commerce business in India:

• E-Commerce is a business model “enables a firm/individual to conduct business over an electronic network, typically the Internet.” The consumer and seller or service provider interaction gets better and efficient.
• E-commerce can be carried out for both wholesale trade or for retail trade (sale towards final consumption).
• It can be either Business to Business (B2B) trading or Business to Consumers (B2C) trading.
• There is no restriction on conducting e-commerce per se in India. However, certain restrictions exist, if e-commerce is being done by companies receiving FDI.
• In India, 100% FDI under automatic route is allowed in Business to Business e-commerce since 2000.
• A distinction is made between single brand retail (selling products of a single brand) and multi-brand retail with respect to permission for FDI and e-commerce.

Significance of E-commerce entities to India

• Increase Competitiveness of Indian goods: They offer discounted prices to small sellers for their raw material and lower their cost of production.
• Increase Exports: These platforms have increased the reach of small businesses nationwide and even helped them address export markets.
• Efficient service delivery: For customers, they have made product returns hassle-free and improved product quality and variety.
• Improved Logistics: They have revolutionized the country’s logistics industry and supply chains.
• Employment Generation: Their contribution to employment generation is now significant.
• Increased Disbursal income for poor households: The lower prices that e-commerce companies offer is an indirect real income increase, especially for our relatively low-income households.

Concerns Regarding Growth of E-commerce in India

• India’s e-commerce sector is set to expand into an oligopoly with the entry of Reliance, Tata, and a revamped Snap deal from a near-duopoly of Amazon and Walmart-owned Flipkart at present.
• An oligopolistic market can indeed see its players join hands to form a cartel and act against consumer interests.
• There are oligopolies that exist in other industries; for example, cement, where producers have been punished by the Competition Commission for operating illegal cartels.
• However, at present, there is no evidence of such anti-competitive practices in the e-commerce sector.

Need for new e-commerce policy

• There is no commonly accepted definition of e-commerce. Further, there is inadequate data on the trade of digital products. Both these shortcomings require effective policy making in the country.
• The e-commerce market is expected to reach US$ 64 billion by 2020 and US$ 200 billion by 2026 from US$ 38.5 billion as of 2017. Thus there is a need for clearly laid-down rules for electronic commerce in the country.
• E- Commerce is currently regulated by multiplicity of government departments such as IT Department, industrial policy, revenue, and RBI. Hence, a national e-commerce policy would consolidate the various norms and regulations to cover all online retailers.
• With the increasing online frauds, there is a need to strengthen the regulatory regime for protecting the consumer in the context of e-commerce

Main provisions e-commerce policy

• A common definition of electronic commerce for the purposes of domestic policy-making and international negotiations would be adopted.
• It proposes a single legislation to address all aspects of digital economy and a single regulator for issues related to FDI implementation and consumer protection.
• It mandates localisation of data in India. The draft also says the government will have access to data stored in India for national security and public policy objectives.
• The draft policy proposes 49% FDI under the inventory model for Indian-owned and Indian-controlled firms to sell locally-produced goods on their online platforms.
• All active e-commerce portals in India will have to register with e-Central Consumer Protection Authority (CCPA). CCPA shall act as a nodal agency for intra-government coordination, checking frauds within the industry, formulating regulations and more.
• On the matter of discounts, the draft policy suggests a period for every discount and offer, beyond which no e-commerce portal can be allowed to provide discounts.
• It recommends Centralized registration instead of local registration of e commerce companies.

Issues in e-commerce policy

• Due to mandatory supervision of Competition Commission of India on Merger and Acquisition and regulation on discounts have led to apprehensions of return of license raj.
• Data localisation norms in draft policy can discourage international firms to invest in India.
• The FDI provision restricted to Indian firms may Influence the much the needed FDI in general and e commerce industry in particular.
• The policy state that the Indian government must have access to e-commerce data at all times. This is a dangerous as it allows state surveillance, in the guise of safeguarding the privacy of Indian citizens.
• The policy fails to distinguish between personal and collective data and treats all data as one whole.
• Electronic commerce or e-commerce is a business model that lets firms and individuals buy and sell things over the Internet.
• Propelled by rising smartphone penetration, the launch of 4G networks and increasing consumer wealth, the Indian e-commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion in 2017.
• India’s e-commerce revenue is expected to jump from US$ 39 billion in 2017 to US$ 120 billion in 2020, growing at an annual rate of 51%, the highest in the world.
• The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second-largest e-commerce market in the world by 2034.

Way forward

• Encourage market entry and ensure that there is no excessive regulation.
• More e-commerce companies entering the market should result in more choices for small sellers in terms of the platforms they want to list on, depending on the listing fees, commission, and so on.
• Further, many of India’s small-business owners should be gainfully employed elsewhere; large numbers are into subsistence entrepreneurship because of a lack of jobs.
• E-commerce platforms cannot engage in such price discrimination, like any other retail shop. So, they should be allowed to offer discounts for limited periods on specific goods.