India intends to impose stricter rules on e-commerce platforms in order to prevent Amazon and Flipkart from undermining small business sales. The Indian Ministry of Consumer Affairs has proposed new amendments that would make it illegal for e-commerce platforms to hold “specific types of flash sales” of goods. Moreover, the companies might need to employ a Chief Compliance Officer and a 24×7 Grievance Officer who should be an Indian resident.
The move, as per the Indian government, comes after it received numerous complaints from traders, consumers, and associations against unfair trade practices and cheating in the e-commerce ecosystem in India. Platforms such as Amazon and Flipkart hold a myriad of flash sales during festivals like Diwali and occasions like Independence Day. So, under the new law, these platforms will be prohibited by law to hold such flash sales in the country.
“Certain e-commerce entities are engaging in limiting consumer choice by indulging in ‘back to back’ or ‘flash’ sales wherein one seller selling on [the] platform does not carry any inventory or order fulfilment capability but merely places a ‘flash or back to back’ order with another seller controlled by the platform. This prevents a level playing field and ultimately limits customer choice and increases prices,” said the Ministry of Consumer Affairs in an official statement.
Furthermore, the Ministry proposes to force e-commerce platforms to appoint a Chief Compliance Officer as well as a Resident Grievance Officer. They will be responsible to ensure compliance with the Consumer Protection Act, 2019 and Rules. It is similar to the new IT Rules 2021 clause that forced social media giants such as Twitter, WhatsApp, and Facebook to appoint an India-based Chief Compliance Officer (CCO) in the country.
The authorities recently proposed the new amendments to the Consumer Protection Act in India and seek comments or suggestions by July 6. So, if the proposed amendments are applied to the Consumer Protection rules, then e-commerce giants like Amazon, Flipkart, and other players will be prohibited to hold flash sales.
So, what do you think about the new proposed rules for the e-commerce ecosystem in India? Do you think it will limit unfair trade practices and help small businesses? Let us know in the comments.