Ecom rules will cause huge damage to MSMEs in TS

AS high as 83 per cent sellers in Telangana are of the opinion that the draft e-commerce rules need to be reconsidered, according to a recent poll carried out by India SME Forum (ISF), to ponder over the implications of the policy.

Post the survey, ISF recently organised a roundtable on 'Decoding draft policy for E-Commerce: Impact on Startups, Tech Entrepreneurs & MSMEs in Telangana'.

Experts who participated in the event, expressed fear that the implications of the Consumer Protection (E-Commerce) (Amendment) Rules bill, 2021 on the Micro, Small and Medium Enterprises (MSME) industry as a whole would do more harm than good. They said that if the draft e-commerce rules were implemented in the present form, MSMEs in Telangana will be robbed off of their last resort of recovery and the State will incur losses to the tune of approximately Rs 11,487 crore.

Vinod Kumar, president, India SME Forum, said, "The amendments increase compliance burden on e-commerce entities and make the marketplace inaccessible to small and medium businesses, which depend on these entities for sustenance. It is important for the government to revisit these rules and detangle the complexities."

One of the much-debated provisions of the bills includes banning of flash sales, and promotions and advertisements by sellers. Experts also concurred to the fact that offline market space and online market space should have separate regulations since most financially and educationally marginalised entrepreneurs do not have access to digital medium. The rules also propose the appointment of a grievance officer, a chief compliance officer, and a nodal contact person for 24×7 coordination with law enforcement agencies. Moreover, it is mandatory for e-commerce entities to register with the Department for Promotion of Industry and Internal Trade (DPIIT).

Experts have expressed grave concern on the draft of the latest e-commerce policy, which was released by the Ministry of Consumer Affairs in May this year.

K Srinivas, Zonal General Manager, South - 2, NSIC, Government of India, said that the primary task, at present, should be to create digital awareness among MSMEs as well as the government to prioritise women-run enterprises even via e-commerce.

"Industrial policy has failed because it has targeted sectors. It's based on which sector should win, and with regard to the draft rules, offline retailers seem to be winning. It would be more effective if it was targeted towards characteristics like quality, for instance. If we want to support small retailers through a consumer policy, then we should at least achieve that and leverage large firms instead of shooing them away," said Vivan Sharan, Visiting Fellow, Observer Research Foundation.

Technology adaptation across the MSME sector remained the general consensus amongst the expert panelists. Those amongst the expert panelists included Ravi Budama, Founder CEO, StartUp Yo, Rama Devi, President, ALEAP, Sandeep Devarapalli, Co-Founder, Hackstrap, and S Vijay Venkatesh, Co-Founder, Syscon Cronus.

Experts, for long, have criticised the move by the government to ban flash sales on e-commerce websites and many agreed that such discounted sales allow small sellers, artisans, weavers, craftsmen, homemakers to sell their goods around festive seasons at attractive prices. Banning of flash sales, according to the expert, would hurt small entrepreneurs and further widen the gap between physical and online retail.

"Having withered two waves of a devastating pandemic, MSMEs need all the support they can get from policy makers. The draft rules are not only counterproductive but will be more damaging in the long run than Covid itself since these rules will be permanent. In this regard, the sellers and ISF have agreed to approach the government and make their voices heard before the 21 July deadline," the forum concurred.