E-Commerce Rules 2020

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Topic: General Studies 2

• Mechanisms, laws, institutions and Bodies constituted for the protection and betterment of people
• Statutory, regulatory and various quasi-judicial bodies.

In News: India’s latest e-commerce policy draft includes steps that could help local startups and impose government oversight on how companies handle data.

• The government has been working on the policy for at least two years amid calls to reduce the dominance of global tech giants like Amazon.com Inc., Alphabet Inc.’s Google and Facebook Inc.
• The government would appoint an e-commerce regulator to ensure the industry is competitive with broad access to information resources.
• The policy draft was prepared by the Ministry of Commerce’s Department for Promotion of Industry & Internal Trade.
• The rules cover marketplaces working as aggregators, and inventory-led models where the retailer owns the stocks

The Need: India’s roaring digital economy, with half a billion users and growing, is witnessing pitched battles in everything from online retail and content streaming to messaging and digital payments. Global corporations lead in each of these segments, while local startups have sought help from a sympathetic government that recently banned dozens of apps backed by Chinese technology giants.

What is there in the draft?

• Mandates government access to online companies’ source codes and algorithms, which would help ensure against “digitally induced biases” by competitors
• Govt. can ascertain whether e-commerce businesses have “explainable AI,” referring to the use of artificial intelligence as there’s a tendency among some of the leading companies to exercise control over most of the information repository. This will ensure that the network effects do not lead to creation of digital monopolies misusing their dominant market position
• On the issue of where data is stored, the draft leaves open the question of which e-commerce platforms would have to keep information locally. Hosting data overseas has been a sticking point in previous drafts, which sparked criticism for being heavy-handed in helping local startups at the expense of others. Government, in consultation with relevant stakeholders, will define the categories of e-commerce that would require mirroring or localization.
• E-commerce companies will be required to make data available to the government within 72 hours, which could include information related to national security, taxation and law and order.
• E-commerce platforms would be required to provide to consumers the details of sellers, including phone numbers, customer complaint contacts, email and addresses. For imported goods, the country of origin and value of work done in India should be clearly specified.
• Also, foreign e-commerce companies providing live streaming services that use payment tokens should be regulated to ensure that users route such transactions through formal and regulated payment channels.
• The rules stipulate that e-commerce platforms will have to set up a grievance redressal cell and appoint a nodal officer, and ensure all complaints are resolved within a month.

Must Read: New consumer rights law

Connecting the Dots:

1. Discuss the salient features of Consumer Protection (E-Commerce) Rules, 2020.
2. The e-commerce revolution in India is setting a dangerous precedent which defies traditional market logic. Do you agree? Explain.