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

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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.


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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.

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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?