India plans for tighter e-commerce rules

Reviewed memos along with the Ministry of Finance proposals such as “excessive” and “without economic rationale”, reveals India’s plan to tighten rules on its e-commerce market. The memos offer a rare glimpse of high-stakes policy-making governing a market already featuring global retail heavyweights from Amazon to Walmart, plus domestic players like Reliance Industries and Tata Group. Grant Thornton forecasted a sector worth $188 billion by 2025.

It’s not clear how the objections from the finance ministry will ultimately be reflected in the proposed rule changes. Its complaints won’t fall on deaf ears in the upper echelons of Prime Minister Narendra Modi’s administration. Suhaan Mukerji, managing partner at India’s PLR Chambers, a law firm that specialises in public policy issues says that the ministry of finance raising such concerns would likely spur a rethink of the policy. India shocked the e-commerce world with proposals from its consumer affairs ministry. The new rules have no formal implementation timeline. Those were announced after complaints about the unfair practices of foreign companies, from brick-and-mortar retailers.

But the finance ministry, the ministry of corporate affairs and the federal think-tank NITI Aayog have all raised objections in memos. They state that the proposals go far beyond their stated aim of protecting consumers. The memo says that the proposed amendments are likely to have significant restrictions on a sunrise sector. Care needs to be taken to ensure that the proposed measures remain light-touch regulations. NITI Aayog’s vice chairman, Rajiv Kumar, wrote to Piyush Goyal, who is minister for commerce as well as consumer affairs minister, saying the rules could hit small businesses.

The consumer affairs ministry secretary, Leena Nandan, told Indian media that wide and varied diverse views had been expressed on the proposed new rules. The arguments by the finance ministry and NITI Aayog are in line with concerns raised by sector operators. New Delhi has changed its e-commerce policies. They also took a hardline regulatory approach that hurts American players. In July memo, the corporate affairs ministry objected to one proposed clause to be enshrined in new rules. The memo stated that it is undesirable to introduce a mini-competition law regime in the consumer rules.

The finance ministry has raised a total of 12 objections. In that a proposal that made online shopping websites liable for its seller’s mistakes would be a huge dampener. They also protested against the banning of flash sales, which see deep discounts on websites like Amazon and are popular during festive seasons. The ministry says that this is a normal trade practice, without economic rationale.