Government mulling regulatory regime for e-commerce

In a bid to effectively regulate the country’s e-commerce market, which has more than tripled in the last 4-5 years, the government is considering a regime where there will be a clear demarcation of the sector’s activities to be handled by different ministries and regulators.

By Arun S

Pointing out that e-commerce activities are very complex and diverse to be kept under the jurisdiction of a single department or ministry, the department of consumer affairs has moved a note for the consideration of the committee of secretaries (CoS) and sought approval for a proposal for clear allocation of business rules with respect to the sector.

Currently, there is no single law in the country to regulate, monitor and supervise e-commerce. Also, what is making monitoring a very difficult task is the lack of  a mechanism of registration/licencing of online retailers, sources said.
Besides, the government has taken note of online retailers cleverly taking undue advantage  by operating out of low tax regions, they said.

During any probe on online frauds, the government will be troubled by problems in accessing data on servers and data centres situated overseas, they said. They added that all such issues necessitate clarity and formalisation in how different government departments handle e-commerce activities.

According to the consumer affairs department’s proposal, the department of revenue will handle taxation related issues, while the Reserve Bank of India should look into banking and foreign exchange issues. The consumer protection issues will be taken care of by the consumer affairs department, while foreign investment and trade policy will be under the purview of the commerce and industry ministry.

The ministry of IT and telecom will handle data protection, cyber security and issues related to registration of server and websites, while competition policy related matters will fall within the corporate affairs ministry’s jurisdiction.
Criminal frauds will be looked into by the finance, corporate and home ministries. A database on the sector will be maintained by the statistics department, while the information and broadcasting ministry will take care of advertising norms and related matters.

This kind of a system is needed in the future because most of the complaints related to the sector are being referred to the consumer affairs department on the contention that since the department looks into ‘internal trade’ matters, it should handle e-commerce matters, too, as such activities also constitute ‘internal trade’.

However, the consumer affairs department has asked for more clarity in the definition of ‘internal trade’. The department said though it can take care of consumer protection issues and grievances, e-commerce also has several other issues including tax evasion, online frauds, predatory business practices, data privacy/cyber security and FDI.

On other problems related to e-commerce, the department said since there is no list of genuine/licensed online sellers, consumers do not have any mechanism to distinguish between genuine and fraudulent e-commerce players. Besides, many of the sellers also do not provide proper contact information, the department said.

Also, consumers have been confused by different operating procedures followed by online traders for placing orders and purchasing, it said. The department added there are several complaints related to delivery of services and products as well as in cancelling orders and getting refunds for returned items.

The department said small and medium enterprises with very limited resources are troubled by multiplicity of rules and regulations of e-commerce, and therefore are not able to make use of business opportunities.