Stacked boxes sit loaded on an outbound truck at the Amazon Inc. fulfillment center in Bengaluru, India. (Photographer: Ruhani Kaur/Bloomberg) 

Draft National E-Commerce Policy For Encouraging FDI In Online Marketplace Only

The draft national e-commerce policy, to be released soon, has suggested a series of conditions for operating online retail business in India through marketplace model, including mandatory mentioning of seller details on the website for all products and financial disincentives if vendors found to be selling counterfeit products.

The draft policy, accessed by PTI, also encourages foreign direct investment in the marketplace model only and not in inventory-based business.

It said e-commerce players would be required to undertake certain measures, including seller details, to be made available on marketplace website for all products and this shall include the full name of the seller, address and contact details, including e-mail and phone number. Sellers must provide an undertaking to the platform about genuineness of products they are selling. Trademark owners shall be given the option to register themselves with e-commerce platforms.

“In case trademark owners so desire, e-commerce platforms shall not list or offer for sale any of the owners’ products without prior concurrence; in case of specified high-value (luxury) goods, cosmetics or goods having impact on public health, marketplaces will be required to seek trademark owner’s authorisation; the platform shall enter into an agreement with each of the sellers on its platform, under which it shall obtain guarantee of authenticity and genuineness of the products,” the draft policy said.

Also read: Draft E-Commerce Policy Says Data Is ‘National Asset’, Restricts Foreign Access

Besides, the e-commerce player would have to seek a guarantee from the sellers that the product has not been impaired in any manner and that all warranties and guarantees of the brand owner are applicable and shall be honoured accordingly.

"Marketplaces should provide for creation of financial disincentives for sellers if found to be selling counterfeit products. In addition, if a seller is found to be selling counterfeit products, the marketplace should blacklist that seller from selling on its platform for a specified period," it said.

It also said all e-commerce sites or apps available to Indian consumers (displaying prices in rupees) must have maximum retail prices on all packaged products, physical products and invoices, besides in view of the misuse of the "gifting" route, as an interim measure, all such parcels shall be banned, with the exception of life-saving drugs.

India Post must conduct due diligence on 'from and to' shipping entities and addresses and set thresholds in the shipment booking system to eliminate misuse of the Foreign Trade (Development & Regulation) Act, 1992, it said.

Besides, it suggested that consumer or business payments from Indian banks and payment gateways to unauthorised and unregistered (goods and services tax non-compliant) sites/apps shall be barred and as a transparency requirement, e-commerce entities would be mandated to make a full disclosure to the consumer regarding the purpose and use of data collection upfront, in a simplified and an easily understandable form on their websites/application interfaces.

Also read: Draft E-Commerce Policy Has Left Out Key Areas Which May Create Issues: CAIT

Further, it said an e-commerce platform in which foreign investment has been made cannot exercise ownership or control over the inventory sold on its platform.

It said online marketplaces shouldn't adopt business models or strategies which are discriminatory, "that is, which favour one or few sellers/traders operating on their platforms over others".

The other conditions which would be applicable to all e-commerce websites or applications include that all product shipments from other countries to India must be channelised through the customs route; an integrated system that connects customs, the Reserve Bank of India and India Post to be developed to better track imports; any non-compliant e-commerce app or website will not be given access to operate in India; all e-commerce sites or applications available for download in India must have a registered business entity in India as the importer on record or as the entity through which all sales in India are transacted.

"This is important for ensuring compliance with extant laws and regulations for preventing deceptive and fraudulent practices, protection of privacy, safety and security," the draft said.

To contain online distribution of pirated content, the draft proposed setting up of a body of industry stakeholders to identify 'rogue websites' and after verification, these websites shall be put in the 'Infringing Websites list'.

The government would seek views of public stakeholders on the draft to formulate the final policy.

Also read: Draft E-Commerce Policy: Consultation A ‘Welcome Move’, Say Flipkart And Amazon