New e-commerce rules may hinder business growth of companies, say experts

The new draft e-commerce rules issued by the consumer affairs ministry earlier this week is likely to increase the compliance requirements of e-commerce companies and have the potential to stunt the business growth of the firms as the proposed amendments attempt to curb broad discounts, restrict the expansion of private labels, strategies companies often bank on to get more users, experts said.

Nikhil Narendran, partner at Trilegal, said that the term flash sale has been very loosely worded in the draft regulations and it appears that the definition implies a check on events that typically run for a certain duration like grand Diwali sales or something akin to heavy discount events like a Black Friday or Cyber Monday sale that is prevalent in the West. “This to my mind is anti-consumer in nature. It is not something a consumer protection law should say. Malls run grand shopping festivals but barring e-commerce entities from doing the same does not make sense,” Narendran told FE. Flash sales happen when a company offers immediate discounts to buyers to dispose of a large stock of products; that is the general understanding, Narendran explained.