New e-comm rules to hijack small trader's lives

New draft e-commerce rules can render 60 lakh people jobless in Karnataka says Industry experts. 89 per cent sellers in Karnataka want further deliberation on the draft rules ?

Karnataka is home to over 6,556 startups and MSMEs in sectors such as food processing, IT consulting, and business support services most of which collaborate with e-commerce platforms for businesses. The startups including local traders using e-commerce and MSMEs in the State have not only contributed a significant amount of monetary disposition to the country but generated lakhs of jobs.

Recently, the Karnataka government announced the Karnataka Digital Economy Mission as part of its Beyond Bengaluru initiative to build opportunities and create innovative ecosystems for emerging businesses and startups. The initiative aims to bring stakeholders including industrialists, entrepreneurs, small sellers, startups, and thought leaders to make the most of the State's growing potential. However, the recently issued amendments to draft e-commerce rules will restrict innovation and opportunities for small businesses on these platforms. If the draft e-commerce rules are implemented in its present form, the entire startup sector relying on online platforms will be disrupted as it causes multiple hassles for small businesses.

The amendments in the rules seek to ban flash sales, bring logistics providers into e-commerce ambit, put an entry barrier on entering the marketplace model and more importantly push consumers to offline markets for purchase. As the bulk of consumers in India are from the middle class, these promotions enable them to buy quality products at competitive prices from the safety of their homes and maintain social distancing norms. 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 also raised concerns about how these rules, if implemented, can have an obstructive impact on the economic development of the country with respect to job opportunities, scope for the growth of MSMEs, global investments, and consumer experience. According to a recent poll conducted by the India SME Forum 89 per cent sellers in Karnataka are of the opinion that the draft e-commerce rules require further deliberation. Sharing his opinion on this, 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 who depend on these entities for sustenance. It is important for the government to revisit these rules and detangle the complexities."