Over 4,000 online sellers urge govt to reconsider draft e-commerce policy

Our Bureau Bengaluru | Updated on July 20, 2021

With compliance burden on e-commerce platforms, small sellers might be unable to avail the support services at cost-effective rates in future

About 4,288 small online sellers, who sell their products on e-commerce marketplaces have signed a petition requesting the government to hold stakeholder consultations and further deliberations before finalizing the proposed draft e-commerce policy.

The draft had proposed certain limitations on e-commerce flash sales and increased platform accountability by mandating e-commerce players to appoint local grievance officer, a chief compliance officer, and a nodal contact person for 24×7 coordination with law enforcement agencies

Commenting on this Vinod Kumar, President, India SME Forum, said, “The draft amendments increase compliance burden on e-commerce entities and make the marketplace inaccessible to small and medium businesses who depend on these entities for sustenance. It is important for the government to revisit these rules and detangle the complexities.”

Flash sales

The sellers also added that the bulk of consumers in India are from the middle class, these promotions (flash sales) enable them to buy quality products at competitive prices from the safety of their homes and maintain social distancing norms. Discounted sales on e-commerce platforms are also a big source of revenue for small businesses and if the changes are approved, these can hurt consumers as well as local and household sellers.

Further, small sellers are able to avail support services (like transport, shipping, and delivery) from e-commerce platforms at competitive prices due to their low-cost business model. But with increased compliance burden on e-commerce platforms, small sellers might be unable to avail these services at cost-effective rates in future.

Additionally, ban on these sales foster a demarcation between physical and online retail. Sales in the offline marketplace don't go through the same amount of scrutiny as is being placed on online platforms, the sellers said in a press statement.

“No one is fundamentally against regulating the sector. There is a need for it. However, the current guidelines miss their mark by a significant margin and need to be clarified for the industry.” said Nirupama Soundararajan, Senior Fellow and Head of Research, Pahle India Foundation.

She added that in terms of the cost of selling, we need to understand that when you place an excessive amount of compliance on any entity, a part of that burden does trickle down. With regard to the draft rules, a sizable amount of compliance burden will shift to small sellers.

India is home to approximately 6.3 crore MSMEs, contributing around 6.11 per cent of the manufacturing GDP and 24.63 percent of the GDP from service activities to the country. The sector also commits approximately 33.4 per cent to the country’s manufacturing output through national and international trade.

Ravi Bansal, Global E-commerce Head, Unyscape, argued that everyone must benefit from the ecosystem instead of just a few players. “The new norms should benefit the consumers regardless of whether they’re shopping online or offline,” said Bansal.

Published on July 20, 2021

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