E-commerce adoption in India has created an environment, where consumers can buy goods to meet their daily needs, while abiding by social distancing norms. At the same time, it has allowed MSMEs to continue selling their products and finish their inventory, and get access to cash flow for survival. It has allowed small sellers to reach a wider audience and even market their products outside India. MSMEs in allied sectors like logistics and delivery that are connected with e-commerce, have also reaped the benefits of this sector.
We have worked intently towards enabling MSMEs to go digital in the last 4 years and hope to further leverage e-commerce, to ensure that MSMEs build competitiveness and position ourselves as a strong link in global supply chains. Given its impact and reach, e-commerce is now being seen as a preferred channel to connect with pan-India consumers.
For this, we request withdrawal of the proposed changes to the Consumer Protection (E-commerce) Rules, 2020 to ensure that complexities and compliances do not impact the growth of the sector. In their present form, the proposed changes are applicable to all e-commerce companies, early-stage or otherwise. They require such companies to register with the government, put in place a grievance redressal system, appoint compliance officers, etc. These requirements are burdensome and will discourage the next generation of entrepreneurs from entering into the industry. It is also at odds with Prime Minister Narendra Modi's flagship Startup India initiative. The government has incubated startups with innovative tech solutions for warehousing, logistics, supply chain and last mile delivery (through its supply chain labs programme).
It has also provided tax benefits, eased compliance burdens and simplified over 30 regulations for creating an enabling environment for startups in the country. The proposed changes will run counter to this. They will also undo all the efforts undertaken by the government to boost India’s ranking on the World Bank’s Ease of Doing Business index.
Further, the proposed changes burden online platforms, sellers, and support service providers with additional layers of compliance requirements. The changes require marketplaces to register compulsorily with the government, appoint a nodal officer, a chief compliance officer (CCO). The government proposes to hold the CCO personally responsible for ensuring compliance with the rules. On the contrary, offline stores and malls have no such compliance obligations. With increased compliance burdens, the changes unfairly discriminate between online and offline business models. This is inconsistent with the government’s push to accelerate Indian digital economy.
Thus, this is to request the Government to take a conducive approach after consulting all stakeholders, on matters pertaining to regulation of e-commerce, considering the benefits offered by e-commerce for Indian MSMEs. We urge the government to reconsider the proposals, and prioritise digitisation of MSMEs, through positive policy measures, that ease their migration to digital channels.