E-commerce exploitation through e-retailers’ unethical practices forced lakhs of shops to close: CAIT

Ease of Doing Business for MSMEs: The exploitation of e-commerce channel through unethical business practices of online retailers in India has led to lakh of shops being forced to close, traders’ body Confederation of All India Traders (CAIT) said on Sunday urging Commerce Minister Piyush Goyal to roll out the e-commerce policy immediately. “They (e-commerce companies) are trying to create a false narrative that (draft e-commerce) rules are stringent, will increase compliance burden, will discourage FDI in India, and malign the image of India in the global market,” BC Bhartia, National President and Praveen Khandelwal, Secretary General, CAIT jointly said in a statement.

The government had last month proposed amendments to Consumer Protection (E-commerce) Rules that indicated stricter compliance for e-commerce companies such as Amazon, Walmart-owned Flipkart, and others. The marketplaces have been continuously questioned by CAIT against their alleged business malpractices. The Ministry of Consumer Affairs, Food & Public Distribution, announcing the proposed changes, had categorically noted that that there was an “evident lack of regulatory oversight in e-commerce which required some urgent action”.

The draft rules were in response to complaints from traders, associations, and consumers against “widespread cheating and unfair trade practices being observed in the e-commerce ecosystem.” According to a Reuters report on Monday, Amazon and Tata Group had warned government officials at a meeting organised by the Consumer Affairs ministry and Invest India that tougher rules for online retailers would have a major impact on their business models. The report, for instance, said that the proposed policy states e-commerce firms must ensure none of their related enterprises are listed as sellers on their websites, however, this could impact Amazon in particular as it holds an indirect stake in at least two of its sellers, Cloudtail and Appario.

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CAIT argued that some of the major foreign-funded e-tailers in a very clandestine manner are unhappy with the draft e-commerce rules because if these rules are implemented, they will have to bring drastic changes in their existing business format which will prove to be counterproductive to their sinister game of controlling and dominating not only e-commerce trade but also the retail trade of India. “These are all useless arguments to derail the reformative measures of the government to purify the e-commerce business of India and to liberate the same from the vicious clutches of foreign-funded e-tailers and the traders across the country will resist strongly any such move initiated by vested interest parties,” Bhartia and Khandelwal added.

The draft rules had also mandated e-commerce companies to provide a ranking for goods and ensure that the ranking parameters do not discriminate against domestic goods and sellers – among the issues raised by CAIT earlier. The government had last year also stated that e-commerce entities will have to provide an explanation of the main parameters which, individually or collectively, are most significant in determining the ranking of goods or sellers and the relative importance of such parameters through an “easily and publicly available description drafted in plain and intelligible language.”