India SME Forum says draft e-commerce rules will cause disruption

Our Bureau New Delhi | Updated on July 20, 2021

The amendments will also have an impact on extended support levied by e-commerce platforms   -

“The amendments increase compliance burden and make the marketplace inaccessible to small and medium businesses’

The India SME Forum on Tuesday said the proposed amendments in the e-commerce rules under the Consumer Protection Act may make marketplaces inaccessible to small and medium enterprises and urged the government to revisit the proposed rules. It had earlier written to the Prime Minister raising concerns on the impact of these norms.

The industry body, which represents over 86,000 MSME players, has raised several concerns and said that the amended rules, if implemented, can cause unnecessary disruption and compliance burden for the MSME players.

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Vinod Kumar, President, India SME Forum, said, “The 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

Terming the proposed provision aimed at prohibiting certain kinds of flash sales as an “ambiguous and overreaching measure”, the Forum stated that these sales are a big source of revenue for small businesses.

“If the changes are approved, these can hurt consumers as well as local and household sellers. Additionally, ban on these sales foster a demarcation between physical and online retail. Sales in the offline marketplace doesn’t go through the same amount of scrutiny as is placed on online platforms,” it added.

Referring to the provisions that will require online platforms to appoint nodal officers, chief compliance officers and grievance redressal officers among other provisions, the industry body said this will impact small sellers who conduct business through their own websites.

“Small businesses don’t have the appropriate means to abide by the norms proposed by the new guidelines which makes the online marketplace inaccessible to them and disrupt the ease of doing business,” it added.

Stating that the amendments will also have an impact on extended support levied by e-commerce platforms, it added that due to the increased compliance burden of support service providers, small sellers will be unable to avail these services at cost-effective rates.

Mandatory registration

The industry body also pointed out that amendments such as mandatory registration with DPIIT will create stringent burdens on online platforms forcing them to change the way business is conducted which in turn could impact sellers.

“Having withered two waves of a devastating pandemic, MSMEs need all the support they can get from policy makers. The draft rules are not only counterproductive but will be more damaging in the long run than Covid itself since these rules will be permanent,” the India SME Forum added.

The deadline to submit comments on the proposed amendments in the Consumer Protection (E-Commerce) Rules, 2020 ends on Wednesday.

Published on July 20, 2021

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