Home Retail New e-commerce policy draft may curb deep discounts by online retailers

    New e-commerce policy draft may curb deep discounts by online retailers


    Any group company of an online retailer or marketplace may not be allowed to directly or indirectly influence the price or sale of products and services on its platform, a recommendation in the initial draft of a national e-commerce policy suggests.

    New e-commerce policy draft may curb deep discounts by online retailers
    The policy draft has been circulated among stakeholders for discussion and could completely restrict e-tailers from giving deep discounts.

    The policy draft has been circulated among stakeholders for discussion and could completely restrict e-tailers from giving deep discounts. The draft has also suggested to introduce a pre-set timeframe for offering differential pricing or deep discounts by e-commerce players to customers.

    The suggestions are part of the strategy to address anti-competitive issues in the e-commerce sector effectively, says a report by news agency PTI.

    “The restriction imposed on e-commerce marketplace, to not directly or indirectly influence the price of goods and services, would be extended to group companies of the e-commerce marketplace.

    “A sunset clause, which defines the maximum duration of differential pricing strategies (such as deep discounts) that are implemented by e-commerce platforms to attract consumers, would be introduced,” the draft reads, according to a report in PTI.

    Further the draft recommended to permit 49 per cent foreign direct investment (FDI) in inventory-based business-to-customer model of e-commerce. Currently, FDI in such businesses is prohibited and it is allowed only in marketplace model.

    It stated that sale of country-made goods through online platforms would be promoted by permitting limited inventory-based business-to-customer model, where 100 per cent made in India items would be sold through Indian owned e-retail companies.

    The initial draft has also talked about adopting a common definition of e-commerce for the purpose of domestic policy making and international negotiations as currently there is no commonly accepted definition.

    At present, industry ministry, consumer affairs, department of IT, WTO, OECD and UNCTAD have separate definitions.

    According to PTI, the draft has proposed that “e-commerce may be understood to mean buying, selling, marketing, selling, marketing, distribution, or delivery of goods, services and digital products (like e-music, e-books, software) through electronic means”.

    It also called for steps to develop capacity for and incentivise data storage in India though creation of facilitative data infrastructure.

    The incentives could include according infrastructure status to data centres and server farms besides extending tax benefits and rebate in customs duties.

    The draft, reports PTI, said that the development of cutting-edge and innovative technologies in India would be promoted by ensuring access to data.

    In context of international trade negotiations, policy space for granting preferential treatment and imposing customs duties on e-transmission to digital items created in India would be retained.

    Further, says PTI, it recommends steps for increasing use of Rupay. The steps could include identifying deficiencies in infrastructure, providing budget, branding, and addressing quantitative deficiencies in service for wider use of Rupay.

    It suggested to set up a ‘social credit database’ through PPP to promote digital lending and use of blockchain technology for further financial inclusion.

    To enhance participation of MSMEs in e-commerce, it has called for several steps including setting up of e-retail platform, addressing issues of financing for online participation, incentivising platforms and aggregators to engage MSMEs.

    The initial draft has recommended the Competition Commission to consider amending some threshold rules to mandatorily examine competition-distorting M&As below the existing ‘de minimis’ level, as per PTI.

    E-commerce companies may be asked to mandatorily make full disclosure to the consumer regarding the purpose and use of data in a simplified way, and also share main features of their terms and conditions besides disclosing clauses governing their arrangement with the vendors.

    It has also suggested setting up of a central consumer protection authority to act as a nodal agency for intra-government coordination, mandatory registration of all e-commerce operators, registration of complaints.

    “The legal framework governing unsolicited commercial SMSs and calls would be strengthened. A law/regulation to govern unsolicited commercial e-mails would be framed,” the draft stated, according to the PTI report.

    It said that the grounds for seeking disclosure of source code to government would be expanded to include situations of unfair trade practise, fraud.

    “The policy space to seek disclosure of source code would be retained, by not taking any commitments on this issue in international trade negotiations,” the draft said.

    The relevant GST provisions would be modified to create a level playing field between online and offline delivery of goods and services, besides providing GST refund for goods exported by courier would be considered.

    “A single legislation to address all aspects of ecommerce would be enacted and a single regulator would be set up to consider issues like FDI implementation,” the initial draft said as per PTI.