Ecommerce rules criticized for seeing issues in the wrong places
âThere is a lack of clarity on what e-commerce regulation is supposed to do, and it looks in the wrong places where the problems are,â Vikram Sinha of the IDFC Institute said at a panel discussion. media hosted by Chase India to discuss the government’s proposed Open Network for Digital Commerce (ONDC). He added that the draft e-commerce rules must recognize that sensitive points exist on the business side rather than the consumer side.
India’s proposed changes to e-commerce rules were designed as a response to antitrust complaints against e-commerce giants like Amazon and Flipkart. The changes include new rules to limit who can sell on market platforms, the establishment of a grievance mechanism, new display and labeling criteria for foreign products, a ban on sales flash, restrictions on promotions, back-up liability, among others. But the proposed rules have come under heavy criticism from almost all sides, including within the government itself.
Read: Summary of proposed changes to e-commerce rules, 2020
âI don’t see the regulation addressing issues like the one-sided rewriting of contracts and the essentially exorbitant custom contracts that businesses face on intermediary platforms. The problem is when you don’t look at these questions it doesn’t matter if you build an ONDC because you’re always going to face market consolidation, âSinha replied when asked about the loopholes in the proposed rules. .
He was also skeptical of the ability of regulators to extract the âalgorithmic transparencyâ needed for enforcement. The algorithms used by the platforms are so complex that even experts cannot detect manipulation, Sinha said.
Will ONDC be enough to counter the big e-commerce companies?
Parminder Jeet Singh, Executive Director, IT for Change, detailed the haphazard way the steps towards e-commerce regulation were taken during the session.
“ONDC is the right direction”
- “This [ONDC] is touted as the UPI of digital commerce. This is the right direction. The problem with ONDC is that it is a technical infrastructure. The technical layer would be inadequate for e-commerce and its complexities. It will be easier to have interoperable social media than digital commerce because there are no physical things to exchange and return and assess the quality, âexplained Praminder Singh.
- âI take this example to say that it’s easy to set standards. Nothing comes out of it. How do you make sure that the actors are operating according to these standards? UPI was easy because finance is a regulated industry. If you have to do it in social media or in commerce, you have to regulate it first, âhe suggested.
- âDon’t just decentralize power to the grid. There is a network, but the power has been replaced by the power of data and AI. A platform is not just a network, but a repository of data and AI. We need to add data infrastructures that will support open networks, âhe said in response to a question from Subhashish Bhadra, Director, Omidyar Network India
“The draft rules on electronic commerce are integrated into the rules relating to consumers”
- âThe main regulatory instrument (for electronic commerce) still today is the foreign direct investment (FDI) rules. Taking the consumer rules route is as stupid as the FDI route, âSingh said.
- âWhile some consumer protections are needed, try to regulate other players like creators and small businesses. It was the wrong method that was applied, âSingh said.
- âThe main regulation is that there should be no vertical integration between the traders and the platform. This is why the Reliance and Tatas of this world who relied on this exception to make it big in e-commerce are unhappy, âhe explained.
What is India’s approach to other countries?
Vikram Sinha thinks other countries have a clear idea of ââwho they want to target with the regulations.
- âWhat is common between the European approach and the American approach is that it is calibrated according to their objectives. There are specific quantitative metrics as mechanisms to say, âWe don’t fall under these rules. Can we re-evaluate this? ‘. We totally miss that as this is an ex ante regulation, âhe complained.
- âThe target should be the behavior of the big platforms which play a vital role in the market because they bring two sides of the market that had no way to connect before. But we shouldn’t be imposing that kind of burden on every small omnichannel retailer that has nothing to do with these issues, âhe told the roundtable.
“We need a law like the law on digital markets”
- “I agree with Vikram that I think digital markets should be composite legislation that deals with both consumers and middlemen who are completely dislocated and pulverized in this new interpretation of what business becomes after. these rules. The Digital Market Acts are so good and they wrote it so well that you can cut and paste most of them, âSingh advised.
- âWe do not agree with the submission of the IDFC which appears to be skeptical of the regulation, and we are in favor of the regulation. We should take some efficiency losses for the good of the structures. The emphasis on efficiency will produce an economic structure, which not only is unfair, but creates social unrest and is detrimental to consumers in the long run, âSingh said.
- âThe consumer rules are one of the worst drafts I’ve seen anywhere,â Singh said.
What do we know about ONDC?
The Union government launched the ONDC as a digital project in 2020 to define protocols for cataloging, supplier discovery, price discovery and to standardize the process of integrating retailers into electronic marketplaces as well as the supply and delivery of products through online channels.
The project was launched in parallel with the changes in the rules of electronic commerce. The government established a steering committee in November last year to formulate, implement and oversee ONDC policies. The Department for the Promotion of Industry and Internal Trade (DPIIT) entrusted the implementation of a pilot project for ONDC to the Quality Council of India.
DPIIT also formed an advisory board for ONDC with nine members in July this year. They are:
- RS Sharma, CEO, National Health Authority
- Nandan M. Nilekani, Non-executive Chairman of Infosys
- Adil Zainulbhai, President, QCI and Capacity Building Commission
- Anjali Bansal, Founder and President, Avaana Capital
- Arvind Gupta, Co-Founder and Director, Digital India Foundation
- Dilip Asbe, Managing Director and CEO, NPCI
- Suresh Sethi, Managing Director and CEO, NSDL
- Praveen Khandelwal, Secretary General, CAIT
- Kumar Rajagopalan, CEO, RAI
Members will advise the government on the measures necessary to design and accelerate the adoption of the ONDC.
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