E-commerce regulation in India: The government recently unveiled draft guidelines for e-commerce platforms, mandating self-regulatory measures to safeguard consumers from fraudulent practices amid the rapid growth of digital shopping in India. While these norms are well-intentioned, industry experts argue that the regulations must accommodate the diverse business models of different e-commerce companies.
India’s e-commerce sector, projected to reach $137.21 billion by 2025 and $363.30 billion by 2030, is growing at a staggering compound annual growth rate (CAGR) of 21.5% during 2025–2030, according to Mordor Intelligence. As artificial intelligence and social media fuel concerns around targeted selling and consumerism, the government seeks to balance this growth with consumer protection.
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Highlights of draft e-commerce guidelines
The draft, ‘E-commerce – Principles and Guidelines for Self-Governance’, was prepared by the Bureau of Indian Standards (BIS) under the supervision of the ministry of food and consumer affairs. The guidelines aim to strengthen consumer trust by addressing challenges in three critical phases of the e-commerce lifecycle: pre-transaction, contract formation, and post-transaction.
The provisions of the guidelines include thorough Know Your Customer (KYC) checks for sellers to ensure accountability and transparency in the marketplace. They also mandate accurate product information, requiring clear and truthful descriptions to help consumers make informed decisions. Transparent return and refund policies have been proposed to simplify post-purchase processes, along with secure payment gateways to enhance consumer safety. Additionally, the guidelines emphasise fair competition, prohibiting preferential treatment and combatting counterfeit goods that undermine consumer trust and legitimate businesses.
Stakeholder feedback on these guidelines has been invited until February 15, highlighting the government’s intent to collaborate with industry players and other stakeholders to shape a more robust regulatory framework.
Why does e-commerce regulation matter
Several factors have driven the government to tighten oversight of e-commerce platforms. One significant issue is the rise of counterfeit goods, which defraud consumers and harm legitimate businesses. Popular products are often replicated by fake sellers, leaving consumers with substandard or unsafe items. While the draft guidelines propose measures such as seller verification, product authenticity checks, and consumer reporting systems to tackle this problem, raising consumer awareness about such malpractices remains a pressing challenge.
Another major concern is the lack of transparency and inadequate consumer protection mechanisms in the e-commerce ecosystem. Many consumers face issues such as delayed deliveries, misleading product descriptions, and difficulties in obtaining refunds, leading to widespread dissatisfaction. Addressing these issues is critical to fostering trust in online platforms.
Finally, the issue of market dominance by large e-commerce platforms continues to be a challenge for regulators. These platforms are often accused of abusing their market position to stifle competition. The guidelines aim to ensure fair treatment for all businesses, but enforcement mechanisms need to be strengthened to achieve meaningful outcomes.
The foreign vs domestic debate
India’s regulatory landscape often appears to favour domestic players over foreign companies, adding another layer of complexity. Foreign-backed platforms like Walmart’s Flipkart have faced stringent regulations, resulting in delays in their plans, such as Walmart’s six-year-long wait for Flipkart’s IPO. In contrast, domestic giants like Reliance Retail are perceived to operate under relatively relaxed norms.
The recent return of Donald Trump to the US presidency could intensify this debate. Trump’s administration is likely to view India’s protectionist stance critically, possibly retaliating with tariffs and escalating trade tensions. To avoid a potential trade war, the Indian government may need to rethink its approach and adopt a more balanced regulatory framework that ensures fair treatment for all players.
Global trends in e-commerce regulation
Globally, efforts to regulate e-commerce have gained momentum. A landmark agreement signed by over 90 countries at the World Trade Organisation (WTO) seeks to establish a global framework for digital trade. This agreement, led by Japan, Australia, and Singapore, aims to reduce reliance on paper-based processes by recognising electronic documents and signatures across borders. It also includes legal safeguards to prevent online fraud and misleading claims, thereby ensuring a fair and trustworthy marketplace.
To support developing nations, the agreement provides grace periods of up to seven years for implementation and offers financial assistance to help them adapt to the new framework. These measures aim to make the growth of digital trade more inclusive and equitable. India could benefit from joining such initiatives, which would not only strengthen consumer protection but also reassure e-commerce players of a level playing field.
The Indian government’s efforts to regulate its fast-evolving e-commerce sector are commendable. However, for these guidelines to succeed, they must strike a balance between consumer protection and business growth. Ensuring consistency and fairness in enforcement across domestic and foreign players is crucial, as is the incorporation of global best practices, such as those outlined in the WTO framework.
By addressing these challenges, India can harness the immense potential of its booming e-commerce market while safeguarding consumer interests. This would foster trust, drive innovation, and ensure sustainable long-term growth for one of the country’s most promising sectors.