Cross-border E-commerce: How Existing Law Is Supporting Both Brands And E-com Operators
Cross-border e-commerce is the latest disruption in the e-commerce sector where sellers now have access to the international market and as a result can compete with the domestic retailers
Simply put, cross-border e-commerce means the buying and selling of goods and services between a business and a consumer or between two businesses or between two persons, where one of such parties is situated in a different jurisdiction. Cross-border e-commerce is the latest disruption in the e-commerce sector where sellers now have access to the international market and as a result can compete with the domestic retailers to provide more options to the local consumers. However, before the international sellers can begin to sell in India, certain aspects need to be considered. The e-commerce entities are regulated by the Consumer Protection (E-Commerce) Rules, 2020 and laws relating to foreign exchange, data protection, tax liabilities, etc.
E-commerce is buying or selling of goods or services including digital products over digital or electronic network. India allows 100 per cent foreign direct investment through automatic route in e-commerce activities with a rider that e-commerce entities would engage only in business to business e-commerce and not in business to consumer e-commerce. However, in order to cover the entities incorporated outside India but systematically offering goods and services to consumers in India, the FDI policy included foreign companies within the definition of e-commerce entity. This concept has been followed and was notified in the Rules in an attempt to create more uniformity and transparency for buyers.
The Rules apply to all e-commerce entities operating in India, including those systematically offering goods or services to consumers in India. An e-commerce entity includes a foreign company, a company or body corporate incorporated outside India which has place of business in India by itself or through an agent, physically or through electronic mode; and conducts any business activity in India in any other manner. Therefore, foreign sellers have also been brought within the ambit of the Rules. The Rules, inter alia, restrict sellers from adopting any unfair trade practices, obligate them to provide accurate information relating to the goods and services being sold, and require the appointment of a grievance officer for consumer grievance redressal.
The Rules prescribe several compliances for the e-commerce entities and specifically require to register the name and details of the importer while offering any imported goods and services to consumers in India. To ensure that the domestic manufacturers and suppliers get a fair and equal treatment on the e-commerce platform it has been provided that where an e-commerce entity offers imported goods or services, it shall incorporate a filter mechanism to identify goods based on country of origin and suggest alternatives to ensure fair opportunity to domestic goods.
The Department of Promotion of Industry and Internal Trade has proposed several changes in the Rules which were proposed on June 21, 2021, including mandatory registration, make “adequate disclosures” with respect to cross-selling on the platform, to ban on the “mis-selling” of goods and services offered on any e-commerce platform to the consumers by deliberate misrepresentation of information by such entities about such goods or services by the sellers, and appoint a chief compliance officer to ensure compliance.
In terms of protecting the data and privacy of consumers, the Information Technology Act 2000 and the rules and regulations framed thereunder require certain safeguards for the collection and storage of personal data which is collected during the process of sale and purchase. India also does not have a dedicated data localization provision as of now. The Personal Data Protection Bill 2019, which is yet to be passed by the government provides that the only the critical personal data shall be stored in India and all other personal data can be stored outside the country.
The Indian laws also provide for a robust regime in respect of contract law, intellectual property law, labour laws, etc. As most of the e-commerce contracts are online, the Indian law provides for the legal validity of such contracts provided that the essentials of a contract in terms of offer, acceptance, and consideration are fulfilled. This gives both the buyers and the sellers a guarantee that the contract will be enforceable in case either party does not fulfil its obligations. The Sale of Goods Act 1930 also places an obligation on the seller of goods to provide for returns and refunds policy, in addition to certifying that the product is upto marketable standards.
Therefore, while there is a need for a dedicated cross border e-commerce policy, it would be incorrect to assume that the current legal system is majorly lacking in any way. Indian regulatory regime has a healthy mix of all the rules and regulations required for all the e-commerce stakeholders to smoothly conduct their operations. The only thing that remains to be seen is how the government responds to the ever-changing landscape of cross border e-commerce and its willingness to take steps in order to make India a lucrative market for international sellers.