• Consumer Protection (E-Commerce) Rules, 2020 were notified by the Central Government to combat unfair trade practices through e-commerce. These were framed under the Consumer Protection Act of 2019.
• To manage its ever-growing e-commerce sector the changes have been proposed..

Rationale for the amendments:

• Importance of eCommerce: The size of India's ecommerce market is expected to grow by 84% to $111 billion by 2024 from around $60 billion in 2020.
• Unfair trade practices: Several unfair trade practices need to be kept under check - manipulation of search results, preferential treatment to specific sellers, exclusive launches, selling goods nearing expiry, flash sales etc.
• Offline players: The heavy discounting offered by some multi-national players affects the business of offline players.
• Conflict of interest: As both players and regulators, e-commerce platforms provide a marketplace and also compete directly with other sellers. Conflict of interests arises from this.
• Data loss and privacy violation: A lot of consumer data is mined by these firms that results in violation of privacy.

Chief Compliance Officer  and Nodal contact person:

• A chief compliance officer will be appointed to ensure compliance with the rules. He will be the contact person for Enforcement agencies.

Grievance Officer:

• A resident grievance officer will be appointed to redress grievances of officers.

Compulsory registration:

• All ecommerce companies will have to register with DPIIT and will be issued a registration number to help consumers identify genuine platforms.

Related parties and Associated enterprises:

• These cannot be registered on the same platform.

Misrepresentation prohibited:

• Any form of misrepresentation of information of any product has been prohibited.

Promotion of Indian products:

• Goods will be identified on the basis of their country of origin and Indian alternatives will be suggested to consumers.

Fall back liability:

• e-Commerce firm will be held liable if a seller fails to deliver his products or services resulting in losses to the consumer.

Specific flash sales or back-to-back sales:

• If they limits customer choice, increase prices and prevent a level playing field then they are not allowed.

Customer Data:

• Data of customer can be shared only after explicit permission of the customer.

• Offline Retailers - It will help brick-and-mortar retailers in retaining customers by restricting discounts and cashback.
• Make-in-India products: To compete with imported goods, e-commerce providers must offer domestic alternatives. This will increase demand for made-in-India products.
• Lead to more accountability - stakeholders of e-commerce firms will be more accountable through various officers and registration systems introduced.
• Level playing field for all:
  • Search results and search indexes cannot be manipulated by e-commerce companies to provide preferential treatment.
  • Unfair trade practices such as false advertising is also protected under the rules. In addition, the rules forbid differentiating treatment between sellers of the same category by the logistics provider.

• Impact on employment and growth: The stringent rules may increase the bottlenecks for eCommerce platforms resulting in stifling employment generation and growth of this sector.
• MSMEs could be discouraged: MSMEs have also been able to reach a wider audience by selling their products through e-commerce. These MSMEs will be discouraged from going online if the rules for marketplaces are tightened.
• Regulation instead of welfare: Instead of focusing on the welfare of the consumers the rules seek to regulate the sector as a whole.
• Cannot sell their own retail products: No e-commerce entity's related parties or associated enterprises can be enlisted as sellers for direct sales to consumers. This may affect the investment in this sector.
• Compliance burden: The rules will increase the compliance burden of these companies.
• Judiciary overburdened by legal challenges: Vague terms and increased scope for government intervention can open to law suits burdening the judiciary even further.
• Flash Sales: Consumers benefit from flash sales and they also help in liquidating inventories.

• Given the importance of eCommerce sector in India and its expected growth in the coming years the need to stop unfair trade practices, promoting Indian producers and protecting the interest of the consumers is imperative. The new rules aim to achieve the same. Government must nevertheless evaluate genuine criticism of the rules to make them more effective.