Framework on anvil to curb fake reviews on e-commerce sites

• To protect consumer interest, the Department of Consumer Affairs (DoCA) will prepare the framework after studying current mechanism being followed by other e-commerce companies and “best practices available globally.
• The decision comes after the ministry and Advertising Standards Council of India (ASCI) held a virtual meeting with e-commerce companies & other stakeholders, to discuss magnitude and roadmap ahead for fake reviews on such websites.

E-commerce

Advantages of e-commerce

• Enables sellers to come closer to customers that lead to increased productivity and perfect competition.
• The customer can also choose between different sellers and buy the most relevant products as per requirements, preferences, and budget. Moreover, customers now have access to virtual stores 24/7.
• Also leads to significant transaction cost reduction for consumers.
• Has emerged as one of the fast-growing trade channels available for the cross-border trade of goods and services.
• Provides a wider reach and reception across the global market, with minimum investments.
• Enables sellers to sell to a global audience and also customers to make a global choice.
• Geographical boundaries and challenges are eradicated/drastically reduced.
• Cuts the product distribution chain to a significant extent.
• A direct and transparent channel between the producer or service provider and the final customer is made.
  • This way products and services that are created to cater to the individual preferences of the target audience.
• Customers can easily locate products since e-commerce can be one store set up for all the customers’ business needs
• Ease of doing business: It makes starting, managing business easy and simple.
  • The growth in the e-commerce sector can boost employment, increase revenues from export, increase tax collection by ex-chequers, and provide better products and services to customers in the long-term.
• Directly impacts the micro, small & medium enterprises (MSME) in India by providing means of financing, technology and training and has a favourable cascading effect on other industries as well.

Disadvantages of e-Commerce

• Lesser accountability on part of e-commerce companies and the product quality may or may not meet the expectations of the customers.
• Depends strongly on network connectivity and information technology.
• Mechanical failures can cause unpredictable effects on total processes.
• Definite legislations both domestically and internationally to regulate e-commerce transactions are still to be framed leading to lack of regulation of the sector.
• At times, there is a loss of privacy, culture or economic identity of the customer.
• There is a chance of fraudulent financial transactions and loss of sensitive financial information.
• The Internet is borderless with minimum regulation, and therefore protecting intellectual property rights (IPR) on the Internet is a growing concern. There are currently several significant IPR issues including misuse of trademark rights.

Government Initiatives Regarding e-Commerce in India

• February 2019 - draft National e-Commerce policy has been prepared and placed in the public domain, which addresses six broad issues of the e-commerce ecosystem viz. e-commerce marketplaces; regulatory issues; infrastructure development; data; stimulating domestic digital economy and export promotion through e-commerce.
• The Department of Commerce initiated an exercise and established a Think Tank on ‘Framework for National Policy on e-Commerce’ and a Task Force under it to deliberate on the challenges confronting India in the arena of the digital economy and electronic commerce (e-commerce).
• The Reserve Bank of India (RBI) has decided to allow "interoperability" among Prepaid Payment Instruments (PPIs) such as digital wallets, prepaid cash coupons and prepaid telephone top-up cards. RBI has also instructed banks and companies to make all know-your-customer (KYC)-compliant prepaid payment instruments (PPIs), like mobile wallets, interoperable amongst themselves via Unified Payments Interface (UPI).
• FDI guidelines for e-commerce by DIPP: In order to increase the participation of foreign players in the e-commerce field, the Government has increased the limit of foreign direct investment (FDI) in the e-commerce marketplace model for up to 100% (in B2B models).
• Government e-Marketplace (GeM) signed a Memorandum of Understanding (MoU) with Union Bank of India to facilitate a cashless, paperless and transparent payment system for an array of services in October 2019.
• The heavy investment of Government of India in rolling out the fibre network for 5G will help boost e-commerce in India
• In the Union Budget of 2018-19, the government has allocated Rs 8,000 crore (US$ 1.24 billion) to BharatNet Project, to provide broadband services to 150,000-gram panchayats.

Exam Track

Prelims Takeaway

• e-commerce
• Types of e-commerce
• Government initiatives for e-commerce

Mains Track

Q. Discuss e-commerce regulation in India. Do you think India should revisit its e-commerce policy?