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A Reflection on E-Commerce Regulation in India

Introduction

Since 2018, the E-commerce market in India has shown the potential to grow and is projected to touch 188$ USD by end of 2025.[1] E-commerce and the internet came together in India during the 1990s and were widely used by the public when major companies like Amazon and Flipkart came into India, along with government-launched reservation websites were launched (IRCTC). Internet was available in India since 1991 but it took some years for people to understand its purpose and how to use it better. One of the major breakthroughs came when a free commodity was introduced to aid such e-commerce. Reliance Industries in India distributed free SIM cards for people for a certain time period allowing them to use the internet for free. This act triggered the entrance of many customers to e-commerce and their exposure to e-commerce parties/entities. This has led to a digital revolution in India since the 2000s. Availability and opportunity to people via the internet played a crucial role in the rise of e-commerce in India. With the acknowledgement of the use of the internet and the opportunity to use such internet services by Jio, the consumers lead to the growth of e-commerce due to its efficiency and the manner by which this industry catered for the needs of the people of India.[2] The categorization of such evolving steps can be done in three waves which occurred in 1995, 2005 and 2007 which were regarding the internet wave, low-cost carriers and the age of start-ups respectively.[3] India is now only second to China in terms of internet users.[4] From the year 2000, many kinds of products and services were available to the public in India from a large number of companies which was later engraved by the explosive boom of the customers for Flipkart and Snapdeal companies, significantly contributing to the market share With the rise of the internet and access of it through mobile phones, the Indian public was introduced to the advancement of technology and made them get products and services through a touch of a button, thereby catering to their needs faster and better, along with making them explore all the options possible. Hence with such situations and circumstances, regulations in E-commerce were introduced to safeguard the interests of the consumers and the general public.

A Brief Overlook:

The laws on e-commerce do not come from sole legislation, but application to them comes from various parts of laws. Hence, various executive branches, ministries and departments of the government make laws to implement in e-commerce. Such government parts are present at both central and state levels and introduce such laws in their own respective jurisdictions. Let us understand the regulations which will apply to the e-commerce business starting their business in India. The registration of the e-commerce company is taken care of by the Companies Act of 2013 which accounts for various forms of companies (like LLP or sole proprietorship). Along with the registration, the companies Act provides for other types of requirements and essentials required by an e-commerce business. For the purposes of Taxes, there is the GST (Central Goods and Services Tax) Act of 2017 and for purposes of IT regulations, the Information Technology Act of 2000 is one of the only laws about cyber in India. Some of the major concerns regarding data protection and data privacy are regulated by the IT Act and its amendment and the circulars, regulations, guidelines and Acts of the Reserve Bank of India, particularly in Banking Sector and its related connections. RBI recognized the development of technology to give out such regulations which will apply to the e-commerce entities and connected parties, like the Payment and Settlement System Acts and Regulations of 2007-2008, Master Direction on Digital Payment Security Controls 2021 etc. At present, the draft of the e-commerce rules is up to be debated and passed in the Parliament of India in the year 2022. However, the Consumer Protection (E-commerce) rules 2020 were implemented by the government in the interest of the consumers along with the Consumer Protection Act of 2019. These changes were not only acknowledged by the business but also the judiciary in the case of Sudarsan Cargo Pvt. Ltd. vs Techvac Engineering Pvt. Ltd.[5] by the words “need for bringing suitable amendments in existing laws to facilitate e-commerce in the country”.

Authorities and Branches Involved:

Since E-Commerce in India is regulated by various regulations and different types of areas of laws, the branches and authorities differ in great range. In the present scenario, where the e-commerce rules are under the draft as legislation,[6] the different aspects of e-commerce are regulated by various bodies and branches. When dealing with the aspects of IT under the Informative Technology Act of 2000, the Ministry of Electronics and Informative Technology under the government of India look at the technical aspects with the legislation and circulars. In the case of consumer rights and protection, the department of consumer affairs and in the case of foreign investments, the department of the promotion of Industry and Internal Trade takes responsibility for e-commerce.

Understanding the circulars and legislations based on the subject matter, different branches of government take control with regard to their suitable roles. When speaking of the laws which govern them, the suitable authorities under the said laws are involved with the companies involved in E-commerce. For example, when the case involves a violation of a provision under the Companies Act of 2013, the authorities like the registrar or the tribunal like National Company Law Tribunal established under the said Act are involved in the nature of the incident of the e-commerce-related companies. Another example is in the case of financial services and requirements. When dealing with the banking sectors in India, the Reserve Bank of India plays a major role in regulating such companies and seeing their compliance with the orders, circulars and guidelines. RBI passes certain requirements like registration for license and/or compliance with certain standards with regards to data protection and hence acts as a superior authority in matters regarding such violation in financial or related provisions.

Conclusion:

E-commerce regulations will play a vital role in the upcoming years. With the recent increase in globalization, advancement of technology and the dependency of many people on online or digital platforms, the area is sensitive with regards to the rights, duties and consequences of the actions of the parties involved. The introduction of the Competition Act of 2002 with its amendments and E-Commerce regulations for the protection of customers has formed a very small part, to begin within an area of no primary regulations for e-commerce. Companies that have followed Competition Act have developed themselves in the e-commerce platform and hence should also be consistent with e-commerce provisions. With the upcoming E-Commerce Rules of 2022 of which the draft was made in 2021, the e-commerce regime in India will get stricter for companies. Applicability of such rules will extend to not only the entities who pioneer such platforms but also to those related parties. This applicability scope increasing to related parties will lead to better protecting the customers as in one of the recent breaches in personal information, the incident of JusPay[7] has led to rising concerns on the protection of personal data in e-commerce and digital platforms. One of the main provisions deals with flash sales. Flash sale has been a marketing concept where a particular commodity goes on sale for a brief amount of time at a heavy discount, and this type of activity will be banned when the e-commerce rules are enforced. However, there are certain circumstances where a flash sale is allowed. This choice of sale will lead the entities to act carefully. Other provisions deal with imported goods requirements, misleading advertisements, mis-selling etc. in the e-commerce rules draft.

However, such reading of the draft rules has been based on previous incidents and is strictly based on the incidents which are subjective. The rules are safeguarding the interests of consumers but do not necessarily provide a regulatory framework for e-commerce entities. These draft rules aim to lead to the general concern of the public and customers, and towards not entity-based concerns. A major gap will lie where small or big e-commerce entities will have a challenge in establishing their regulatory requirements as the requirements are not categorizing entities based on their size for such compliance. As stated earlier, the scope of such draft rules is based on a wide application with the term related entities, hence, such a definition of the scope will lead to multiple entities complying with the regulations rather than the specific ones. Along with such regulatory framework in e-commerce entities, certain aspects like exclusive agreements, predatory pricing, product listings, etc. as in a technological era where everything is fast, competitive and a click away, the regulations need to be placed fast and provide a more holistic approach.

Authors Name: Indrayudh Chowdhury & Kush Aryan Gupta (Bennett University, Greater Noida)

References:

[1]‘E-commerce Industry in India’ (IBEF, June 2022) <https://www.ibef.org/industry/ecommerce#:~:text=Introduction,46.2%20billion%20as%20of%202020>, last accessed 15 August 2022

[2] B Karunakar and Bisheswar Sinha, ‘E-commerce in India: Evolution and Growth’ (2016) 5 (3) Int. Journal of Management Research and Business Strategy

[3] Ibid.

[4] Megha Mandavia, ‘India has second highest number of Internet users after China: Report (Economic Times, 26 September 2019) <https://economictimes.indiatimes.com/tech/internet/india-has-second-highest-numberofinternetusersafterchinareport/articleshow/71311705.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst> accessed 2 September 2022

[5] Sudarsan Cargo Pvt. Ltd. vs Techvac Engineering Pvt. Ltd (2013) 4 AKR 654

[6]‘New India e-commerce rules and their impact, explained’ (Economic Times, 28 June 2021) <https://economictimes.indiatimes.com/tech/trendspotting/new-india-e-commerce-rules-and-their-impact-explained/articleshow/83914653.cms>  accessed 15 August 2022

[7] Sushovan Sircar, ‘Juspay Data Breach: Have My Card Details Leaked? What Happens Now?’ (The Quint, 06 January 2021) <https://www.thequint.com/coronavirus/faq/juspay-data-breach-faq-have-my-card-details-leaked-what-happens-now> accessed 15 August 2022