• Harsha Razdan, Partner |

The Indian e-commerce sector has been on an upward growth trajectory in the past few years and is expected reach INR 9.5 trillion by 2025 with a CAGR of 26%, according to industry research. This rapid ascent has been driven by the twin tailwinds of rising internet penetration and a perceptible shift in consumer behaviour towards online shopping. Research also indicates that India has added about 80 million online shoppers in the last three years alone, which is a testament to e-commerce’s rising popularity.

The rise of e-commerce has been a boon for the allied sectors as well, with digital payments in particular receiving a major push. Cash-based transactions have slowly given way to their online counterparts, with cards becoming the most preferred payment method for online shopping. KPMG in India’s 2020 report titled “Time to open my wallet or not?” indicated that UPI and wallet modes put together were 1.3x more than card payments. The report also highlighted that cash payments were opted by only 15% of consumers, while UPI/ Online Wallets and Credit/ Debit cards were opted by 48% and 37% of consumers respectively.

Another allied segment that has benefitted immensely is the logistics sector, which is expected to reach USD11.48 billion by 2027 from USD 2.93 billion in 2019 with a CAGR of 18.8%. This is according to the India E-commerce Logistics Market Forecast 2020-2027.The logistics sector has an enormous employment footprint and its rapid growth bodes well for India’s economy as a whole. Today, e-commerce has also facilitated growth for MSMEs – one of the major drivers of India’s economic growth, accounting for more than 30 % of our GDP. Their growing association with e-commerce, has allowed them access to hitherto untapped demographics, thereby enabling them to rapidly increase their consumer base and revenues. Additionally, e-commerce has also contributed to building a vibrant retail ecosystem in the country and has become a key driver for inclusive growth.

Over the last decade or so, e-commerce has played a symbiotic role with traditional retail businesses to become an instrument of economic growth. The continued robust growth of e-commerce hinges on conducive policies, along with sustained and harmonious collaboration that dwells across all stakeholders – consumers, sellers, platforms, marketplaces, technology aggregators, regulators, etc.. It is pertinent to note that India’s e-commerce sector is not limited to just large online marketplaces but also consists of small online retailers.

The proposed amendments to the Consumer Protection (E-Commerce) Rules, 2020 have been drafted keeping consumers at the Centre, with an objective to safeguard their rights. It takes a more cohesive, expansive view of modern-day trade, recognizing the integral role of intermediaries. It has mandated the creation of a grievance redressal mechanism, as well as the appointment of a grievance officer who shall be responsible for addressing the complaint raised by the consumer within a month of its receipt.

On similar lines to the new Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, the proposed amendments also mandate e-commerce entities to appoint Chief Compliance Officers, who will act as a point of contact for government agencies and shall be liable in case of non-compliance with the rules. While these measures shall assist in improving grievance redressal processes, the rules need further clarity pertaining to penalties in case of non-compliance.

The definition of an ‘e-commerce entity’ in the proposed amendments includes both large market players and small retailers. These pose considerable compliance-related challenges, which can be difficult to navigate, especially for the smaller players. India currently has a thriving and rapidly growing Direct-to-consumer (or D2C) market, wherein companies sell directly through their platforms. These businesses will be affected significantly by the proposed amendments.

Additional requirements to register with Department for Promotion of Industry and Internal Trade (DPIIT) despite already being registered with the Ministry of Corporate Affairs may lead to duplication in compliance and additional redundancies. Similarly, provisions in relation to anti-competitive behavior and personal data governance will only lead to cascading of regulations, given the former is already covered under the ambit of Competition Act 2002 and the upcoming Personal Data Protection Bill 2019.

There is also a need for increased clarity on the obligations of ‘e-commerce entities’ on issues of fallback liability, cross-selling, manipulating search results, fraudulent flash sales and mis-selling. Given that market places do not hold inventory, assigning entire obligations solely on the e-commerce entity will disproportionately affect both small and large e-commerce players. In a bid to protect consumer interest, the proposed amendments oblige e-commerce players to specifically mention the country of origin and best before or use before date.

Lastly, light touch regulations are the need of the hour for regulating the sector, whist maintaining its fast-paced growth. E-commerce has facilitated in building digital capabilities, enabling efficient inventory management, and streamlining operations for small sellers across the country. Above all, it has provided consumers with greater choice and convenience, as an exhaustive catalogue of products is now at their fingertips. The proposed rules put consumers right at the forefront of business and regulatory priorities. It is no longer sufficient to put the onus entirely on the consumer for transactions: The rules, in all likelihood, signify the end of a business-as-usual approach based on the caveat emptor principle. Conducive policymaking is imperative for the unfettered growth of the sector, which will be integral to India’s emergence as a USD5 trillion economy.

A version of this article was carried by The Times of India Online on 28 July 2021