Home Government and Policy Why Australia considers India’s draft e-commerce restrictions as ‘detrimental to trade’?

Why Australia considers India’s draft e-commerce restrictions as ‘detrimental to trade’?

The Indian government’s new e-commerce laws, set up by the Department of Consumer Affairs, have received harsh criticism not only domestically, but also from many international trade organizations and the Australian government. Trade organizations and the Australian government believe that India’s planned e-commerce rules are invasive and harmful to trade. The draft guidelines, which were issued on June 28, tighten the regulations governing online marketplaces.

According to The Indian Express, the Australian government, which is currently negotiating a trade agreement with India, has included a dedicated chapter on e-commerce in the agreement and has written to the Department of Consumer Affairs stating that the new rules would “impose extensive extraterritorial obligations on foreign e-commerce entities operating in India.”

What are the new draft e-commerce rules?

The draft e-commerce rules include provisions that require e-commerce businesses to register with the Department of Promotion for Industry and Internal Trade (DPII). E-commerce platforms’ flash sales have been limited, and e-commerce sites have been ordered to secure the hiring of compliance officers.

However, the laws restricting related parties and the rules on fallback liability are two of the most disputed.

The regulations limiting related parties are intended to address concerns about preferential treatment. The new guidelines recommend that no connected parties be permitted to utilize any consumer information to gain an unfair advantage. Furthermore, none of the e-commerce businesses’ linked parties are permitted to be listed as sellers.

Meanwhile, fallback liability rules hold e-commerce companies accountable if a seller on their platform fails to provide products or services due to negligence.

Why is Australia opposing India’s draft e-commerce rules?

The Australian government, which is currently negotiating a trade agreement with India, has stated that the proposed revisions are unduly prescriptive and may create trade obstacles, particularly for small and medium-sized businesses. The Indian Express received a copy of this submission as well as views from other stakeholders via the Right to Information Act.

According to media reports, several government departments, including the Department of Promotion of Industry and Internal Trade, the Niti Aayog, the Ministry of Corporate Affairs, the Ministry of Finance, and the Ministry of Electronics and Information Technology, have expressed opposition to certain sections of the new e-commerce rules.

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