Brick-and-Mortar Traders Want Policy to Regulate E-Commerce Businesses

The traders from states across India want have sought early rollout of e-commerce policy, e-commerce rules under the Consumer Protection Act, 2019 and a new Press Note to replace Press Note No 2 of foreign direct investment (FDI) in retail.

Putting forward their demand, the Confederation of All India Traders (CAIT) has requested Union Commerce & Industry Minister Piyush Goyal to notify the new policy.

Traders Feel Harassed by E-Commerce Startups. Why?

The traders’ body feels that the policy will give a level playing field to brick-and-mortar traders at par with the e-commerce companies. 

India has witnessed a significant emergence of startups in the ecommerce sector in recent years. The growth of ecommerce in India is primarily driven by the increasing internet and smartphone penetration, rising disposable incomes, and changing consumer behaviour.

CAIT said, “The policy measures are keenly awaited by traders “since they are facing great harassment at the hands of foreign e-commerce companies (such as Amazon, Flipkart, others) and an uneven level playing field because of predatory pricing, exclusivity and owing inventory.”

Why The Delay In E-Commerce Policy?

The draft of the e-commerce policy was put in the public domain in February 2019 for public consultations and suggestions from various stakeholders. This draft policy proposes several measures to regulate the e-commerce sector in India, including data localization, protection of consumer rights, and promoting domestic e-commerce players.

How Are The E-Commerce Companies Regulated Presently?

However, the policy hasn’t been notified and implemented yet. Currently, the e-commerce sector in India is governed by several laws and regulations at the central and state levels. Several acts under which the e-commerce companies are governed are - The Information Technology Act, 2000; The Consumer Protection Act, 2019; The Foreign Exchange Management Act, 1999; and The Goods and Services Tax (GST) Act, 2017.

In addition to these laws and regulations, there are several government bodies and agencies responsible for regulating and monitoring the e-commerce sector in India. These include the Ministry of Commerce and Industry, the Reserve Bank of India, and the Competition Commission of India.

In July 2020, the Department of Consumer Affairs notified the Consumer Protection (E-Commerce) Rules, which outline the duties and liabilities of sellers on e-commerce marketplaces and inventory-based e-commerce entities, as well as provide a framework for consumer grievance redressal. 

However, e-commerce companies have requested further revisions to the rules, including clarification of the definition of an e-commerce entity and a ban on flash sales. As of June 2021, the government has not yet released the final version of the rules.

Deep-Discounting By E-Commerce Startups Kill The Traders?

CAIT National President BC Bhartia and Secretary General Praveen Khandelwal further said that no substantial FDI is entering into India through the e-commerce route and instead whatever money routed under the guise of FDI is used for cash-burning or to support huge losses incurred by global e-tailers.

CAIT has also called to regulate flash sales, market-distorting discount offers made by the e-commerce companies. The traders body also wants the government to make e-commerce marketplaces responsible for the quality of the products sold, misselling of goods and services, equal treatment of all sellers registered on their platforms, etc.

Why Can’t Traders Spend Like E-Commerce Startups In Marketing/ Advertising?

In today's digital age, e-commerce companies have become increasingly popular and successful due to their ability to reach a large customer base through targeted marketing and advertising. However, traditional traders and retailers often face significant challenges when it comes to competing with e-commerce companies in terms of marketing and advertising.

The e-commerce companies spend a lot on marketing and advertising. The e-commerce companies spend a lot on marketing and advertising to promote their products and services to potential customers. They work in a highly competitive market and use different marketing strategies like social media marketing, email marketing, advertising through TV and radio.

The traders, on the contrary cannot spend so much on the marketing and traditional traders and retailers often lack the technological infrastructure and expertise required to compete with e-commerce companies in the digital space.

These unregulated deep discounts give the e-commerce companies advantage over the local shops leading to heavy losses to them.