Laws regulating E-commerce in India

Laws regulating E-commerce in India: All you need to Know

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This article on ‘Laws regulating E-commerce in India: All you need to Know‘ was written by Rishabh Tyagi, an intern at Legal Upanishad.

Introduction

This article deals with the various statutory laws that administer the domain of e-commerce in India. The field of e-commerce has seen significant growth in the past decade. It is a platform that enables consumers to interact with businesses via the medium of the internet. Under the Consumer Protection Act, 2019, it is defined as transactions in relation to goods and services that happen over the network. With e-commerce gradually becoming a behemoth in itself, there was a growing need to protect the interests of consumers and businesses. In India, various aspects of this field are regulated by various ministries of the government as there is no dedicated e-commerce law for it.

Need for Regulation

E-commerce has seen exponential growth throughout the globe and in India, it is expected to surpass the market of the United States. This platform has provided consumers with the convenience to buy or sell products from various businesses from the comfort of their home or their respective place. Just like in offline markets, there was a growing need to protect the interests of consumers and businesses as the substance of the matter remains the same in e-commerce with the obvious difference in the way the transaction happens. Also, due to such a sudden boom in this field, there was a growing need to regulate it for the impending e-commerce warfare.

Laws Governing E-Commerce in India

There are a number of statutory provisions regulating various aspects of e-commerce in India. A few of them have been given below-

  1. Information Technology Act, 2000 (“IT Act”)

The functioning of e-commerce is attended by various provisions under the IT Act. The Act makes it the responsibility of the Central Government to advance the e-governance and e-commerce ecosystem under Section 84A. The provisions for data security and its secure usage via the internet or electronic means are stated under Section 43A of the Act. The IT Act imposes penalties up to INR 1 lakh and provides imprisonment of up to 2 years if a person is convicted of stealing passwords and other sensitive data.

Recently, the Ministry of Electronics and Information Technology in consonance with the Ministry of Information and Broadcasting notified rules that e-commerce entities need to strictly comply with. Under the Information Technology (Guidelines for Intermediaries and Digital Media Ethics Code) Rules, 2021, e-commerce companies would require to establish intermediaries. These authorities are required to have an effective redressal mechanism, to moderate their privacy policy, user agreement, etc. E-commerce companies are required to periodically inform users under these guidelines about changes that happen in company policy and to let users know how their data is being used.

  1. Consumer Protection (E-Commerce) Rules, 2020

These rules were formed under the Consumer Protection Act, 2019 which in turn brought about significant changes to old 1986 consumer law. In the era of rapid changes which include and are not limited to e-commerce, internet banking, etc., the rules act as a framework to regulate the online marketplace and services. All kinds and models of e-commerce businesses, online transactions of goods and services, and unjust practices on such platforms come under the purview of these rules. However, these rules are not applicable to a natural person who is engaged in occasional transactions that too in their personal capacity.

Those entities that are not based in India but provide their goods and services to consumers in India would fall under these e-commerce rules, as these rules have extra-territorial applicability. It is intended on part of the Ministry of Consumer Affairs, Food & Public Distribution to widen the vision of these rules by amending them via a draft but it is still ambiguous what this proposed draft would be about.

  1. Indian Contract Act, 1872, and Sales of Goods Act, 1930

If we look at it from a simplistic perspective, a transaction on an e-commerce website involves the formation of e-contracts which are nothing but contracts made in electronic form over the internet. All the requisites of a valid contract under the Act are mandatory to form a valid contract with an e-commerce entity. Section 10 A of the IT Act, 2000 grants validity to contracts entered into by the parties on the network. It states that just because a contract has been made via such an electronic process its validity or enforceability cannot be questioned.

On the other hand, the shipping, return, refund, and sales policies of the e-commerce platform are regulated by the Sale of Goods Act, of 1930. All the representation, warranties, and transfers related to the movable property are regulated by this Act.

Laws regulating E-commerce in India
Laws regulating E-commerce in India

Suggestions

It is not an alien fact that at present, the e-commerce market is well-settled and continuously experiencing growth. In the Indian scenario, there is no discreet statutory law that effectively deals with this field of commerce yet. It is governed and regulated by various rules and guidelines that are periodically modified by the government. Also, on part of these e-commerce companies, strict compliance with these rules is not seen as the government and its authorities are themselves not sure what standards to set for effective governance.

What is required on part of the government is to make solid specialized laws to properly regulate this platform.  All the stakeholders, their related entities, and experts in the field shall be called upon and proper provisions must be made just like we have our civil and criminal statutory laws. To resolve disputes effectively, policymakers should give a push to alternative dispute resolution (ADR) mechanisms as they are cost-effective and time-saving.

Conclusion

E-commerce despite its current growth still has massive scope for advancement and to achieve this goal it is the duty of the policymakers to properly regulate this field. The current provisions under different laws are utilized to control these entities but it still is not enough to contain the everchanging standards in this field. This chaos needs proper legislative action to convert it into order. People need to be educated about their rights with respect to transactions on this medium. An efficacious regulatory framework is the need of the hour to keep up with rapidly changing technology and subsequent standards that are set up by such changes.

References

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