New E-Commerce Rule

By : Neha Dhyani

Updated : May 24, 2022, 10:17

The Department of Consumer Affairs has evaluated several elements of the amended e-commerce standards for 2021 in response to business and government complaints. Discussed New E-Commerce Rules 2021 Below.

The Ministry of Consumer Affairs, Food, and Public Distribution had already notified and made effective the Consumer Protection Rules (e-Commerce), 2020, under the Consumer Protection Act, 2019.

Furthermore, the Department for Promotion of Industry and Internal Trade [DPIIT] has issued orders forming an advisory panel for its ONDC project, which intends to eradicate "digital monopolies." It's a first step towards creating e-commerce operations with open standards to create a platform that any online store can use.

Key Points of the New E-Commerce Rule

The essential measures of the New E-Commerce Rules 2021 are as follows -

  1. It is necessary to register. E-commerce enterprises should be registered with the Ministry of Commerce and Industrial and Information Technology (DPIIT).
  2. E-commerce entities own, operate, or control any electronic or digital business or network for electronic commerce.
  3. Flash sales on the internet are not forbidden. Only offer specialised flash sales or back-to-back promotions that restrict customer choice, boost prices, or create an unequal playing field.
  4. E-commerce enterprises must also hire a compliance officer (CCO) and a nodal point of contact to work with law enforcers 24/7.
  5. The new standards urge that no linked parties be allowed to use any customer information (from the digital platform) for 'unfair competitive advantage' in response to mounting concerns about preferential treatment.
  6. During the pre-purchase stage, entities must also identify things based on their countries of origin as well as provide a filtering option for purchasers. To give domestic retailers a "fair chance," they will have to provide replacements for such imported products.
  7. Cybersecurity Issues to Report: Any e-commerce entity must answer a request for clarification within 72 hours if a government agency is investigating a law infringement, including cybersecurity issues.
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Major Concerns Related to the Draft Rules

  • All entities involved in logistics, joint ventures, and other ventures could be considered "related parties" under this "broad definition."
  • Consequently, it will be challenging for not just foreign companies like Amazon and Flipkart. Local suppliers like 1mg, Urban Ladder, Netmeds, and others have to provide their diverse brands on their super-apps.
  • There is a 'fallback liability' in the case of E-tailers and platforms that supply services. E-tailers that sell goods and services have contended that sellers of goods and services should bear liability as long as they have internal safeguards.
  • Jurisdictional Expansion: Many of the provisions in the draught rules, according to the NITI Aayog, go "outside the realm" of protection of the consumers. As a result, the Department of Consumer Affairs was accused of "overreach."
  • Strictly Controlled Environment: Some of the proposed requirements are similar to the Information Technology (Intermediary) Rules, 2021, such as appointing a compliance officer and responding to law enforcement demands.

☛ Also Read: Current Affairs Today

The proposed rules define "related party" as "none of an e-commerce entity's related parties can be enrolled as a merchant for direct sale to customers." These regulations are being challenged in several High Courts. In a nutshell, these prohibitions indicate the government's growing aim to control all internet outlets.

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FAQs on New E-Commerce Rule

Q1. Which department evaluates the standards of the New E-Commerce Rule?

The Department of Consumer Affairs evaluates several elements of the standards of the New E-Commerce Rule for 2021.

Q2. Is FDI allowed after the implementation of the New E-Commerce Rule in India?

No, FDI is only permitted in the field of Business to Consumer (B2C) e-commerce after the implementation of the New E-Commerce Rule.

Q3. Which new e-commerce rule is similar to Information Technology (Intermediary) Rules?

Appointing a compliance officer and responding to law enforcement demands is the New E-Commerce Rule similar to Information Technology (Intermediary) Rules.

Q4. Which department has issued orders forming an advisory panel in the new e-commerce rule?

Department for Promotion of Industry and Internal Trade or DPIIT has issued orders forming an advisory panel for its ONDC project in the New E-Commerce Rule.