The U.S.-India Business Council (USIBC) objection to India’s proposed changes to e-commerce rules by a lobby group of the United States Chamber of Commerce has sparked controversy with trade organizations such as the Confederation of All India Traders (CAIT), according to the lobby group.
However, it has also raised the question of what would happen if e-commerce companies, now exposed to tighter regulation due to the proposed rules, fail to comply. It is important to see this from the perspective of the Information Technology Rules (Intermediary Guidelines and Digital Media Code of Ethics) of 2021 and the impact of non-compliance with certain social media platforms. Twitter, for example, has been involved in a dispute with the Indian government over this issue for about a month, and WhatsApp has hired an Indian court to challenge the rules.
MediaNama reached out to a few legal experts regarding the possible outcome of non-compliance with the 2020 e-commerce rules, and they all had a similar statement: Yes, the rules provide more stringent regulations for e-commerce companies and are similar in some respects to IT Rules 2021. However, companies must either stick to the rules whether they want to or not (because a rollback is unlikely) or move the courts to resolve.
However, before we get into the details, What do the proposed ecommerce rules say and why was it rejected by USIBC??
The proposed rules include:
- New rules against abuse of FDI regulations
- Establishment of a complaints procedure,
- New display and labeling criteria for foreign goods
- Data protection for customers, among others
These changes came in response to “multiple depictions of aggrieved consumers, traders and associations complaining about widespread fraud and unfair trading practices in the e-commerce ecosystem“Announced the government in a press release.
According to a report by Reuters, the US lobby group said the rules were worrying and would lead to a “strict e-commerce regime”. Some of the rules are similar to those that “apply to social and digital media companies … leading to a stricter e-commerce regime,” Reuters told USIBC. That being said, the USIBC also reportedly said that India’s proposals “discourage (e-commerce) platforms from owning vendors,” and that the proposed changes “include multiple guidelines, including significant restrictions on the platforms’ ability to organize and sell Handle complaints. ”
CAIT strikes USIBC and calls their objection “complete despair”
The CAIT, which has long been calling on the Indian government to take action against e-commerce companies like Amazon for anti-competitive practices, etc., had welcomed the draft rules published a few days ago. As a result, when reports of USIBC objections to the rules emerged, the dealership panel did not take it lightly.
CAIT said: “The unsolicited intervention of USIBC shows the utter despair of Amazon and Walmart likes US companies that are part of this lobby group because they understand that their sinister game of control and dominance of e-commerce and retail is in India will soon be over and they are trying to block the initiative to implement draft rules. DPIIT for bringing a new one. However, India’s 80 million strong business community will ensure that long-awaited reforms in the e-commerce landscape take place as soon as possible. “
That being said, these are some salient points that CAIT made regarding USIBC –
- USIBC should have advised companies like Amazon and Flipkart to obey and comply with Indian laws
- USIBC’s intervention shows that both Amazon and Walmart are trying to embargo proposed rules
In the event of a tussle, the courts are the final arbiter; Rules unlikely to roll back: Legal experts
The Consumer Protection (E-Commerce) Rules, 2020, have brought to the fore a paradigm shift in the way e-commerce companies must function in the coming days to keep their arbitrariness in check. Understandably, US-based trade organizations like USIBC are against implementing the revised rules. However, since they conduct their business activities in India, it is imperative for them to adhere to them until the rules come into effect, whether they want to or not. Only one court would be the final arbiter when raised – Siddharth Jain, co-founder of PSL Advocates and Solicitors
In a similar opinion, Pratyush Miglani, Managing Partner at Miglani Varma & Co – Advocates, Solicitors and Consultants, said: “Even if the US-India Business Council has rejected the rules, a withdrawal is highly unlikely. Indeed, the similarities between the intermediary rules and the e-commerce rules show that the government appears to be bringing all internet-based businesses to a uniform level of regulation and well under its control. “
“Proposed conformities to adapt e-commerce companies to the changing times”
Given the current digitization of the world, the current rule is an effort by the Government of India to expand the scope of the e-commerce sector by proposing a change in the definition of an e-commerce entity, said Kritika Seth, founding partner of Victoriam Legalis. Seth said that introducing a requirement for ecommerce businesses to register with DPIIT and other compliance regulations will introduce into the rules “to adapt ecommerce businesses to the changing times and changing laws” .
“The government goes a step further and is making e-commerce companies more accountable by referring to the provisions of the Competition Act of 2002, which introduces the concept of related parties and affiliates, recidivism, etc. E- Forcing commerce companies to reevaluate their business models, ”Seth said.
Miglani also said: “On the liability front, e-commerce companies are now liable if a seller on their platform fails to deliver the promised goods or services to the consumer, causing harm to that consumer. While this is a good step towards safeguarding consumer interests, ecommerce businesses can be hard hit. Likewise, the rule that affiliated companies, i.e. all companies with a stake of 10 percent or more in the e-commerce company, cannot be listed as sellers on their platform, will affect companies such as Walmart and Amazon. “