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Industry dept, corporate affairs ministry object draft ecommerce rules; Niti Aayog chief says will hit ease of business

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The Department for Promotion of Industry and Internal Trade (DPIIT) has reportedly flagged several anomalies, and questioned some provisions including the fallback liability of sellers, the proposed ban on flash sales, and the need for definitional clarity of terms, such as “cross-selling” and “mis-selling” in the draft rules.

Industry dept, corporate affairs ministry object draft ecommerce rules; Niti Aayog chief says will hit ease of business
Key provisions of the central government’s draft ecommerce rules have been stridently opposed by the Industry department, Corporate Affairs ministry and Niti Aayog vice-chairman Rajiv Kumar, according to an Indian Express report.
Kumar has reportedly warned that the draft ecommerce rules “will severely harm Ease of Doing Business and impact small businesses”, records obtained by the newspaper under the Right to Information (RTI) Act show.
According to the report, the Department for Promotion of Industry and Internal Trade (DPIIT) has flagged several anomalies, and questioned some provisions including the fallback liability of sellers, the proposed ban on flash sales, and the need for definitional clarity of terms, such as “cross-selling” and “mis-selling” in the draft rules.
DPIIT has reportedly also suggested remedial tweaks in an office memorandum sent to the Department of Consumer Affairs, which had issued the draft rules in June.
Interestingly, Union Minister Piyush Goyal is in charge of the Ministry of Consumer Affairs, Food & Public Distribution, which issued the draft rules, as well as the Ministry of Commerce and Industry, under which the DPIIT falls.
In a letter to Goyal on July 6, Kumar pointed out that the proposed e-commerce rules go “far beyond consumer protection” and “will severely harm Ease of Doing Business and impact small businesses”, the report said.
The Corporate Affairs ministry, too, has reportedly opposed specific provisions of the draft rules, while the Finance Ministry is learnt to have raised red flags.
According to the Indian Express report, apart from “fall back liability”, a key portion of the draft that has come under fire from within the government are the changes proposed under “duties of sellers on marketplace, inventory e-commerce entities”.
Consumer Protection Act, 2019 says product liability is defined as “the responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services”.
Chapter VI of the Consumer Protection Act lays the responsibility of the defective product on the seller or the manufacturer. However, the proposed e-commerce rules, which are being notified as part of the Consumer Protection Act, make online marketplaces responsible for any shortcoming in products delivered through their platforms.
According to the report, industry players have also pointed out that while the
FDI policy prohibits companies such as Amazon and Flipkart from having control over inventory sold on their platforms, the e-commerce draft rules holds these platforms liable in case a seller fails to deliver goods or services due to negligent conduct, which causes loss to the customer.
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