Govt. Undecided On Setting Up Ecommerce Regulator To Protect Online Sellers

Nirmala Sitharaman, the Minister of State for Commerce and Industry, has said that the government is ‘indecisive’ on setting up an ecommerce regulator. The statement was made during the Rajya Sabha session on July 19, 2017 on the basis of presentations made by online sellers body, All India Online Vendors Association (AIOVA).

In response to the queries raised by the opposition (during the session), the Minister said, “Ecommerce activities are governed by a number of Regulation Acts. The government has not reached a decision on setting up a central regulatory body to monitor ecommerce companies as of now.”

She further added, “The Government had received communication from the AIOVA to resolve issues related to payment settlement for online sellers. However, no such data (on the quantum of business done through ecommerce sites in the country) is centrally maintained.”

Online Sellers: Concerns And Demands Raised

Earlier in June 2017, reports surfaced that online sellers at different ecommerce firms urged the Indian government to bring in a regulator for ecommerce. This included sellers particularly from Flipkart, Amazon India, and Snapdeal.

In a petition, the AIOVA – a community of around 2,000 online sellers – alleged that ecommerce firms are violating existing marketplace rules of government. The petition, thus, demands that steps need to be taken to protect both sellers and buyers in the times to come.

The online sellers have demanded for:

• Special tribunals to take up sellers’ issues in the same way that consumer courts work.
• To set up electricity tribunals, and debt recovery tribunals.
• To set up a grievance cell for sellers, along with a competitive market prevention of monopoly and cartelisation.
• Also, ecommerce sellers have demanded the creation of accounting and auditing standards and disclosure norms to prevent scams.

The petition for a central regulator was submitted to the Ministry officials comprising PM Narendra Modi, Finance Minister Arun Jaitley, and Commerce and Industries Minister Nirmala Sitharaman.

Recent Issues That Online Sellers Faced With Ecommerce Firms

Since the start of 2017, mixed sentiments have prevailed in the online sellers’ communituy. While initially they were concerned over payments and layoff issues with firms like Snapdeal, the sudden delisting of 85K sellers on Paytm Mall over authentication issues have also initiated a wave of fear in the online seller community.

Earlier this month, the AIOVA sent a trade advisory notice to Flipkart when a technical malfunction caused the ecommerce marketplace to record wrong weights for shipments. As per reports, the financial impact of the problem ranged between 20% and 30% of a vendor’s gross merchandise volume (GMV).

Prior to this, in March 2017, a group of online sellers reached out to the Competition Commission of India with complaints against WS Retail (Flipkart) and Cloudtail (Amazon). The complaint alleged that both the ecommerce giants are using ‘predatory pricing’ and discounting while selling products via their private label products. This, in turn, affects the business of smaller rivals and other online sellers.

However, with the roll out of GST, online sellers have appreciated the initiatives taken by the ecommerce firms to get them well-versed with the changed regulations. From notifying changes through emails, calls, documents, videos on seller panels or setting up offline centres, ecommerce firms have left no stone turned in educating their sellers about GST. Where Amazon launched the A-Z GST guide, Flipkart provided sellers with free tax assistance along with other efforts.

While in earlier incidents, the Ministry has given an assurance to look into the matters of online sellers, this time it seems to have taken itself out of the loop. At the same time, the Finance Ministry has delayed the provisions related to TDS and TCS for ecommerce players.  Keeping all these factors in mind the effect of being ‘indecisive’ on bringing in an ecommerce regulator remains to be seen.

(The development was reported by ET)