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Foreword
A defining feature of the last decade of the 20th century was technical change, particularly, in the means of communication. The growth of the internet and in particular of the internet of things [IOT], has implied that the nature of transactions between groups of individual has undergone a sea change. Today, this has led to large number of debates around e-commerce. In the simplest form, e-commerce, implying transactions between two or more individuals, involves issues such as data secrecy, control of data act. Most companies now are gauging their strength in market arrangement through their control of personal and other databases of consumers. This implies that a large part of the debates of the previous century will now be re-cast in the context of e-commerce.
The E-commerce sector in India has grown at a remarkable pace of 34% Compounded Annual Growth Rate (CAGR) since 2009 and is estimated to grow at a CAGR of 63% to reach ~USD 8.5 billion in CY 2016. However, like all other flourishing sectors, there are challenges plaguing this sector as well, one of which is inadequate and inefficient legal and regulatory framework able to cope with ensuring rights and obligations of the contracting parties. India enacted the Information Technology Act in June 2000. But, this is being an enabling statute only; we need more regulations for making E-commerce transactions fairer and achieving a more consumer-friendly E-commerce environment in India. This Article seeks to analyse the present E-Commerce laws and regulations in India, their effectiveness in dealing the legal issues of E-Commerce and any need for further addition in the same.
THE NEED FOR REGULATION OF E-COMMERCE IN INDIA
The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second largest e-commerce market in the world by 2034. The industry is all set to record the third highest growth rate in the Asia-Pacific region this year and has more than tripled since 2015; however, it still has a long way to go. With the revolution in e-commerce and the fact that this is only the beginning of the technology sector in India bracing itself for a new era of e-commerce warfare, there is no doubt that India is in need of a regulatory framework that would bridge the various arms of the government. With the ever increasing pace at which e-commerce is growing in the country, a dire need can be felt for a proper framework.
REGULATORY FRAMEWORK FOR E-COMMERCE IN INDIA
As far as regulatory framework governing e-commerce activities is concerned, there are no dedicated e-commerce laws in India. Various ministries and department of the government of India deal with different aspect of e-commerce. For instance, the ministry of Electronics and Information Technology look after the technical aspects of e-commerce through the information technology Act, data privacy issues, etc. The Department of Consumer Affairs takes care of the consumer protection issues. The Department for promotion of Industry and Internal Trade deals with the foreign investment related matters on e-commerce. The Department of commerce deals with the WTO discussions on e-commerce. Although there is no dedicated law governing e-commerce, such activities are governed by a number of laws & regulations applicable to various segments of the e-commerce value chain. Some of these laws come under the purview of central government whereas others fall within the jurisdiction of state governments.
REGISTRATION REGULATIONS
Registration as an e-commerce companies Act, 2013. Registering an e-commerce business either as a company or a firm or a limited liability partnership [LLP] or sole proprietorship. At least two people are needed to register as a private limited company. A memorandum with the objective, Liability of member, capital clause of the company and article defines powers of the management.
TAX REGISTRATION
Registration for goods and services tax [GST] if the sales or turnover crosses more than rupee 20 lakh annually or rupee 10 lakh in case the establishment is in the northeast states.
INFORMATION TECHNOLOGY REGULATIONS
Information Technology Act, 2000. The IT Act 2000 is the sole cyber law in India which also governs, to some extent, the online issues of e-commerce in India. Although the IT Act focuses mainly on digital signature and related aspects, it mandates that the e-commerce entrepreneurs and owners must ensure cyber law due diligence in India.
DATA PROTECTION REGULATORY FRAMEWORK
Section 79 of IT Amendment Act, 2008 sets out conditions under which an intermediary will not be liable for any third party information, data or communication link made available or hosted by him. Data protection has been made more explicit through the insertion of Clause 43A that provides for compensation to a person whose personal data may have been compromised by a company. Under section 72A, punishment for the disclosure of information in breach of a lawful contract is prescribed. Any person including an intermediary who has access to any material containing personal information about another person, as part of a lawful contract, discloses it without the consent of the person will attract punishment with imprisonment of up to 3 years and/or fine of 5 lakh. Section 69 on crimes against national security has been made stronger for interception and monitoring. Sections 66 & 67 on hacking and obscene material have been updated by dividing them into more crime-specific subsections, thereby making cybercrimes punishable.
PAYMENT AND SETTLEMENT REGULATIONS
To allow online payments receipt and disbursements for e-commerce activities, one has to take a license from the reserve bank of India [RBI]. Payment & settlement systems are regulated by the payment & settlement systems Act, 2007 [PSS Act] and Settlement System Regulations, 2008. As per Section 4 of the PSS Act, no person other than the RBI can commence or operate a payment system in India unless authorized by the RBI. The RBI has since authorized payment system operators of prepaid payments instruments, card schemes, cross-border in-bound money transfers, automated teller machine [ATM] networks and centralized clearing arrangement.
THE DRAFT E-COMMERCE POLICY, 2018
The government came out with a draft of much needed policy on e-commerce in 2018. both domestic and international concerns must have guided the framing of such policy. The draft policy has a number of facilitative elements for e-commerce players. For instance, the recommendation to establish a central registry for KYC will reduce the cost and burden of KYC compliance by the payment systems. Similarly the provisions to have controlling stake in spite of minority share by the promoters will allow the young entrepreneurs to grow and seek funding support without giving up control in their entity. There were criticisms of the draft e-commerce policy as it was considered as a regressive step by many. However, one must see this policy from developments at the international arena pertaining to e-commerce. The proposals submitted in the WTO on e-commerce tend to include almost everything under the sun, including physical trade, online trade, payment systems, consumer protections, telecommunication networks, spam mail and source code, to name a few. If all these things are being discussed in the WTO, and may be negotiated in future, the government must know its landing zones in international negotiations on various elements of e-commerce.
POLICY SUGGESTIONS
In India, e-commerce is rapidly growing and is likely to change the way business is performed. Many online companies are venturing into India e-commerce market space to take the first mover advantage. However, it is observed that many e-commerce companies are not adequately following the rules and regulations pertaining to the e-commerce business. This is partly due to the fact that e-commerce laws in India are in evolving stage. India does not have dedicated laws for various types of e-commerce activities are very important from a public policy perspective and hence require specialized rules and regulations to safeguard the consumers against any wrongdoing. For instance, online sales of prescribed medicines in India. The government needs to have specialized laws on these issues as applicable in other countries. For instance, in the USA, the health insurance portability and accountability Act of 1996 and health information technology for economic and clinical health Act are some of the laws that take care of medico-legal and techno-legal issues of e-health and telemedicine.
There are many areas that require focused attention, discussion, with stakeholders and concrete policies in order to facilitate e-commerce business in India. These include, for instance, establishment of independent regulator, such as TRAI for telecom services. It will not only help an orderly growth of e-commerce business in India but also protect consumers from being exploited. The regulator should have effective grievance system and legal remedies if anything goes wrong with respect to the online transactions. India also needs an alternative dispute resolution [ADR] mechanism to resolve e-commerce disputes. E-commerce regulations and laws in India are limited in nature, and this does not allow the use of ADR mechanism and technology-driven solutions. For instance, while European Union and other nations are increasingly using online dispute resolutions for resolving many aspects of e-commerce disputes, it is still unknown in India. Therefore, it can be said that the growth of e-commerce activities has given birth to new challenges that need to be taken care of in order to facilitate and support e-commerce business in India. As most of these challenges relate to the lack of appropriate regulatory infrastructure, the government needs to come forward to initiate various legislation’s related to the online transactions.
Reference
- https://www.researchgate.net/publication/330845555_E-commerce_Laws_and_Regulations_in_India_Issues_and_Challenges#:~:text=India%20enacted%20the%20Information%20Technology,E%2Dcommerce%20environment%20in%20India
- https://blog.ipleaders.in/ecommerce-law/
- E-Commerce in India: Economic & Legal Perspectives https://amzn.in/h10OISQ
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