E-commerce rules could prolong MSME recovery

Disruption and uncertainty over the proposed new amendments in e-commerce rules will affect the recovery of micro, small and medium businesses hit by the pandemic, say experts.

“During the pandemic a large number of MSMEs are struggling to restart their business. During lockdowns and other restrictions, e-commerce is the most viable platform for MSMEs to sell their goods and services. By coming out with new rules for e-commerce at this time will disrupt the market and hinder the recovery of MSMEs,” says Aruna Sharma, member, digitisation committee, Reserve Bank of India.

According to her, MSMEs that are looking to grow their export businesses are increasingly depending on e-commerce platforms, replacing the traditional exporter and trader meets. “MSMEs account for 45-48 per cent of exports and the aim is to take it to 60 per cent.

For this, MSMEs will have to tap the e-commerce route,” she said.

In a similar vein, Anil Bharadwaj, secretary general, Fisme said, “In recent times we have increasingly seen MSMEs using the digital platform to improve their reach. Ecommerce has played an important role during the lockdowns by ensuring products are delivered at home safely.”

E-commerce companies have been handholding MSMEs and providing sales platforms as well as logistics services. For instance, Amazon is hosting Amazon Small Business Days from July 2 to July 4 to help generate customer demand for the unique and differentiated selection of products offered by small sellers, manufacturers, start-ups and brands, women entrepreneurs, artisans and weavers and local shops.

Some of the proposed amendments in the E-commerce Rules are detrimental for the MSMEs. As per the rules, no e-commerce entity shall indulge in mis-selling of goods or services offered on its platform. Mis-selling means an e-commerce entity selling goods or services by deliberate misrepresentation of information by such an entity about such goods or services as suitable for the user who is purchasing it.

According to experts, goods and services are sold by the seller, and ecommerce companies are just the platforms. E-tailer can do due diligence and take measures based on customer feedback. But for all the products and services, the platform cannot be held liable.

Further, a marketplace ecommerce entity shall be subject to a fall-back liability where a seller fails to deliver the goods or services due to negligent conduct, omission or commission of any act by such seller in fulfilling the duties and liabilities in the manner as prescribed by the marketplace e-commerce entity which causes loss to the consumer. These two rules will result in restraint on the part of the platforms while boarding MSMEs.