The Indian
government’s draft e-commerce rules drawn up by the Department of Consumer affairs
has not only seen a sharp pushback domestically but is now drawing flak from
several international trade bodies as well as the Australian government. The
trade bodies and the Australian government feel that India’s draft e-commerce
rules are intrusive and detrimental to trade. The draft rules published on June
28 tighten the regulation on online marketplaces.  

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The Australian
government, which is currently in the process of negotiating a trade deal with
India, has put in a dedicated chapter on e-commerce on the agreement and has written
to the Department of Consumer affairs pointing out that the new rules would “impose
extensive extraterritorial obligations on foreign e-commerce entities operating
in India,” reports The Indian Express.

What are the
new draft e-commerce rules?

The draft e-commerce
rules include provisions to make registration mandatory for e-commerce entities
with the Department of Promotion for Industry and Internal Trade (DPII). Flash
sales by e-commerce platforms have been limited and e-commerce sites have been
asked to ensure appointment of compliance officers.

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However, two of
the most contentious rules are the rules restricting related parties and the
rules on fall back liability.

The rules
restricting related parties are aimed at tackling concerns of preferential
treatment. The new rules propose to ensure that none of the related parties are
allowed to use any consumer information to get an unfair advantage. Further,
none of the e-commerce entities related parties can be enlisted as sellers.

Meanwhile, the
rules regarding fall back liability make e-commerce firms liable in case a
seller on their platform fails to deliver goods or services due to negligence.

Why is
Australia opposing India’s draft e-commerce rules?

The Australian
government, which is currently negotiating a trade deal with India has said
that it finds the proposed amendments overly prescriptive and may increase
trade barriers, particularly for small and medium enterprises. A copy of this
submission and inputs submitted by other stakeholders were obtained by the
Indian Express under the Right to Information Act.

Media reports
further indicate that several government departments including the Department
for Promotion of Industry and Internal Trade, the Niti Aayog, the Ministry of
Corporate Affairs, the Ministry of Finance and the Ministry of Electronics and
Information Technology have opposed certain sections of the new e-commerce rules.