BENGALURU: Even though the government’s draft guidelines for ecommerce (ecom) platforms, which mandate self-regulatory measures to protect consumers from fraudulent practices, are well-intentioned, they must be tailored to accommodate the diverse business models adopted by different ecom companies, according to industry executives and experts.
The draft guidelines, titled “E-commerce — Principles and Guidelines for Self Governance”, have been prepared by the Bureau of Indian Standards (BIS) under the Food and Consumer Affairs Ministry’s supervision, seeking stakeholder comments by February 15.
“While the guidelines are well-intentioned, they contain many broad clauses that aren’t practical. Ecommerce companies operate under different business models, such as marketplace or inventory-based models. Each model’s responsibilities should be clearly defined and aligned with the role it plays. Otherwise, platforms with the least responsibility could end up shouldering the heaviest burdens, leading to unnecessary and endless complications,” said an industry executive.
The ecommerce market in India, estimated to be at $137.21 billion in 2025, is expected to reach $363.30 billion by 2030, at a CAGR (compound annual growth rate) of 21.5 per cent during the forecast period (2025-2030), according to Mordor Intelligence. One of the primary factors driving the market’s growth is rapid urbanisation. Additionally, rising internet penetration and devices such as smartphones, laptops, and tablets to access ecommerce websites boost the market’s growth.
The government draft says that the rise of ecommerce has introduced new challenges, particularly in terms of consumer protection and trust. It says the importance of clear and effective rules and norms for self-governance in ecommerce cannot be further emphasized in this context.
The framework outlines a three-phase approach — covering pre-transaction, contract formation, and post-transaction stages — for ecommerce operations.
Under pre-transaction requirements, platforms must conduct thorough KYC (know your customer) of business partners, especially third-party sellers. The guidelines mandate detailed product listings, including title, seller contact details, identification number, and supporting media, to help consumers assess product utility and features.
Industry executives also pointed out that ecom accounts for just 7.5 per cent of the country’s overall retail market and questioned why the draft guidelines do not also apply to physical retailers.
“If they become rules, they may make doing online business harder. You need to look at retail broadly as ecommerce is still a tiny percentage of it,” said an ecom company executive. “Also, if you are banning some sellers for some violations, doesn’t that mean you are coming after us? The cost of compliance may also go up for ecom companies as well as sellers,” the executive added.
Owing to return and refund policies on platforms, 48 per cent of online shoppers got stuck with the wrong product, while 20 per cent reported receiving a fake or counterfeit item at least once in the past year, reveals a survey by LocalCircles, a community platform. Consumers claim that some online sellers are exploiting the non-returnable product category to ship incorrect or counterfeit items. According to the survey, one in five consumers reported receiving at least one counterfeit product in the past 12 months. The highest incidence of counterfeit goods was found in the shoes, cosmetics, and fragrance categories, the community platform adds.
“We escalated this issue to the government last week and are glad to see the draft ecommerce standards addressing refunds, returns, and counterfeit redressal by online platforms,” said Sachin Taparia, founder of LocalCircles.
“If these standards are implemented across all online platforms, consumers will know what to expect, and platforms will be required to provide clear channels for reporting fraudulent practices — whether it’s receiving a product different from what was displayed, or a counterfeit item. In the medium to long term, this will help platforms build greater consumer trust, leading to increased spending,” Taparia said.
The draft guidelines said ecom entities must ensure neutral operations, offering level-playing field to all stakeholders. The guidelines explicitly prohibit preferential treatment to any seller or service provider. The framework mandates policies to combat counterfeit products and requires sellers to ensure accurate product descriptions and content.
A complete transaction record must be maintained and made accessible to consumers as per applicable laws. The guidelines mandate diverse payment options, including credit/debit cards, mobile payments, ewallets, and bank transfers, with full disclosure of processing charges.
Platforms must implement secure payment systems with encryption and two-factor authentication. For recurring payments, the draft requires clear disclosure of duration, intervals, and amounts, along with simple opt-out procedures.
Cash-on-delivery refunds must be processed as per consumer preference.
Post-transaction guidelines specify clear timelines for refunds, replacements, and exchanges, with additional provisions for counterfeit products. Platforms must ensure timely delivery notifications, whether handled internally or by third-party providers.
The draft prohibits the sale of banned products and requires platforms to maintain monitoring mechanisms and seller background checks.
A readymade list of banned products must be available during seller onboarding along with consumer reporting mechanisms for violations.
Source: Business Standard