India’s E-commerce Regulatory Contradictions

Despite excessive e-commerce regulations in India, one can emphatically maintain that much is yet to be rectified. This needs to be specifically done in the P2B sector also known as the platform to the business model.

Owing to regulatory lacuna or void, several allegations have been registered regarding unfair trade practices. Allegations against E-marketplaces have surfaced which involve allegations like skewed placements and ranking, self-preferencing, and opacity and regulations in terms of the use of consumer data.

Thus, given the fact that the e-commerce sector is garnering more and more important, it is quite crucial that regulatory rules are played attention to.

Given the unprecedented last year, the domestic e-commerce market in India has flourished. One might even say that the digital revolution had been ushered by the onset of the pandemic.

this was mainly due to the fact that many individuals were forced to return to their home environment where the usage of e-commerce platforms and digit platforms became an inevitability.

In fact, the increased internet access and high smartphone penetration have fastened the process of digitalization of India. On the other hand, an immediate push for “digital India” by the Modi government has also contributed to the digitalization of India.

If the statistics are to be scrutinized, the pandemic inflicted woes on India’s retail sector that had shrunk by a significant 5 percent. But on the other hand, this opportunity was relished by the e-commerce sector which recorded a growth of a staggering 5 percent. This significantly had ramped up the valuation of the sector to a total valuation of $38 million.

If you are an avid online shopper, chances are you have increasingly heard about e-marketplaces. It can be rightfully stated that e-marketplaces can be seen as the new emerging trend in the Indian market. It is to be noted that – marketplaces connect sellers and business users with consumers but virtually.

E-marketplaces have garnered much popularity and have been presenting a tough fight to the physical retail sector that is still recuperating from the aftereffects of the pandemic. with the fall of the physical marketplaces and due to the variety of perks that were being offered by the e-commerce sector, such as massive discounts, home delivery, variety of products, etc. e-marketplaces have garnered much attention.

The tech giants that had the most to gain were namely Flipkart, Amazon, and food delivery aggregators namely Zomato and Swiggy.

As aforementioned, due to the stiff competition being provided by the e-commerce sector, there has been a growing unease for business users that sell their services offline.

Due to this trend, various allegations have surfaced like that of extremely unfair practices and trade which have been undertaken by presenting deep discounting and preferential treatment of platforms for its own offerings.

These allegations gain importance since the state of competition in the Indian e-commerce market tells the story of the concentration of immense power in the hands of a handful of e-marketplaces.

The unfair practices and growing share of a handful in the market have made it unavoidable for small businesses to partner with them. This is usually due to the fact that various small businesses want to set their foot in the market.

This detestable attribute has put the e-commerce giant in an indispensable position. This is due to the fact that the circumstances have arguably accorded them the status of being ‘gatekeepers’ within the sector.

On top of it, owing to the vast bargaining power imbalances that have cropped up into the system, the business is at a severe disadvantage to not be able to negotiate with such e-marketplaces giants. Thus, this has led to the practice of unfair practices and unfair treatment in the sector.

Talking about the regulation of the e-commerce sector in India, it is to be noted that e-commerce in India does not pertain to a particular sector. Due to this analogy, different aspects of e-commerce are particularly regulated by various other regulators in a particularly fragmented manner.

Now one might argue that various e-commerce regulations are in places like the Competition Act, passed in 2002, or the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 and the consolidated Foreign Direct Investment Policy, that have been significantly drafted for the convenience of the sellers. But it is a fact that all the aforementioned laws are quite toothless in the face of seller woes.

To put the analogy in perspective, it is sagacious to anise the Competition Act, 2002. According to the law, it is to be noted that it allows for significant and effective intervention only if the unfair practices are carried out by some ‘dominant’ entity.

It is due to this detestable attribute that various entities that actually relishing the fruits are left scot-free. Given the nature of the Indian e-commerce market, it is concentrated with a few big players, and not by a clear dominant player.

It is due to this attribute that the Competition Commission of India has been not been effectively and significantly be able to intervene in regulating such oligopolistic concentrations that are much more crippling in nature.

Thus, the need for regulation is immense in the Indian e-commerce sector given the character of the market. Thus, newer regulations and alterations to the existing ones are the need for the hour. But will the government take cognizant of the e-commerce regulations is it something we’ll have to wait and watch?

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The Regulation of Cryptocurrency in India

Call it the world’s greatest invention or the contentious asset of worry, you cannot deny the fact that cryptocurrency has wrapped investors around their fingers.

The fancy of the investors is quite justified given the high returns they earn in comparison to other assets in the market. Of all the investors around the world, Indian investors particularly have been largely invested in the concept.

According to the reports, the Indian Crypto asset industry witnessed tremendous, exponential growth over the last five years.

In fact, one can argue that the popularity of the asset had touched such heights, that authorities and great personalities have joined the debate. It is no news that financial literacy in India is mainly a farfetched concept, with many having little to no knowledge about it. But given the statistic, still more than 15 million Indians effectively now hold digital currencies.

Given the humungous support that has been received by the contentious digital asset, cryptocurrencies, like any other financial asset, also need to be regulated.

This needs to be emphatically done to effectively protect consumer welfare and to highly promote innovation as well.

Certainly, if you are a finance enthusiast or a market spectator, chances are that you know that the government is not particularly kind to the digital member of the financial asset family.

In fact, one can quite rightly describe the government’s demeanor towards cryptocurrency as belligerent.

But even given the central’s tough arduous stance on the digital asset, crypto assets, no matter what, are likely to form the basis of future forms of the internet. In fact, this is quite evident as the world of cryptocurrency in India is growing at an appreciable, astronomical pace.

For the crypto investors, recent weeks have been a roller-coaster ride.

This is due to the fact that the popularity of the crypto comes at a time when New Delhi is specifically aiming to introduce a bill to regulate the asset.

Her, it is worthy of mentioning that experts argue that the crypto market will be the future of the financial sphere in India.

Therefore, one can conclude that India, in future and present terms, is well placed to capitalize on this due to its burgeoning private crypto market. Given the aforementioned argument, it would be extremely unwise to place a ban on private crypto assets.

This will apparently lead to a significant revenue loss to the government. As a matter of fact, if the government even tries to censor the private currency, there are emphatically high chances of clandestine activities to be conducted and to force the nascent industries to operate illegally.

Thus, in lieu of normalcy, it is highly advised that a balanced regulatory approach be followed. It is imperative that the regulatory approach should effectively addresses concerns of money laundering, regulatory certainty, fiscal stability, and investor protection.

This all should be achieved while strategically preserving innovation. This suggestion garners all the importance due to the fact that the financial health of the economy and citizens is not too sound at the moment, any immediate, crippling regulation will certainly lead to financial shock in the economy, something that India can ill afford at the moment.

As a matter of fact, adoption of such a technique should not be an arduous task for the government as most of the aforementioned regulatory necessity to address the policy concerns related to crypto-assets, namely foreign exchange management, investor protection, tax evasion, and money-laundering and tax already exists in the financial legislation. What the need of the hour is the need for adaptation to accommodate an emerging technological paradigm.

Talking about an effective crypto regulatory framework, it should specifically include innovation-friendly, technology-neutral, and consistent to effectively and emphatically harness the full potential of India.

In fact, the prerequisite demand for a consistent, emphasizing framework is that it must lay down clear definitions to strategically and smartly identify the relevant regulatory bodies.

This will systematically help in clearing the ambiguity around the framework structure and operations of the government with respect to crypto. It is no news that in the finance world, one thing that is most certainly detested is uncertainty.

Thus, clarity on the laws and propaganda of the government is needed. It should also provide crypto asset service providers with safe harbor–protection from liability for the actions of investors on their platform.

Finally, one cannot deny the fact that where there are profits there is avarice for higher incomes and thus a high propensity for conduction of illegal activities.

To address this irregularity or inconsistency, the Government should emphatically adopt a co-regulatory approach.

In the co-regulatory approach, various other regulatory authorities and associations like RBI, SEBI, and the Ministry of Finance should be brought into the picture for sharing responsibility for oversight and regulation.

But is supervision and scrutinization by the regulatory authorities enough? To monitor the private players, incentivizing industry whistleblowing is important.

This is necessary as the players within the crypto-market will work to keep a check on each other’s activities, which will emphatically reaffirm the government’s idea of regulation.

Thus, given the aforementioned arguments, it is quite imperative for the government to alter its stance to ban private currency in the market. In order to avoid clandestine, illegal activities, the government will have to be mindful of the investors’ choices and decisions as well.

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