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July 15, 2020

Government of India to mandate displaying ‘Country of Origin’ on e-commerce products

by Rubina Dsouza in Compliance Law, Corporate Law

Government of India to mandate displaying ‘Country of Origin’ on e-commerce products

E- commerce operators to display ‘Country of origin’ on their products

Electronic Commerce in India

  1. Electronic commerce (E-commerce) refers to the buying and selling of physical goods or services using the internet. India has become one of the largest consumer markets for e-commerce industries.
  2. E-commerce means buying or selling of goods or services including digital products over digital or electronic network.
  3. The growth of these e-commerce industries in India has bought in many old and new players in the market like Amazon India, Flipkart, Snapdeal ,etc.; which are very prominent in this industry and earn a lot of revenue from the nation.
  4. Online shopping has infact, become a trend owing to the development of the web portals. India is developing rapidly more towards the e-commerce industry due to the benefits it has for instance time saving, etc.

E-commerce during the COVID 19 pandemic

  1. With the outbreak of the COVID 19 pandemic, it has rather become more convenient to shop from the online web portals which is much safer in comparison to visit the physical stores.
  2. Even during the lockdown period when the shops were shut, it was the e-commerce industries only that were providing people with essential commodities at their doorstep. This depicts the importance of these industries in our lives.

Why are ‘Made in Country’ labels crucial?

  1. Consumer rights includes the right to be informed about the quality, quantity, potency, purity, standard and price of goods, products or services, as the case may be, so as to protect the consumer against unfair trade practices
  2. One of the imperative right of a consumer is that they should be aware of the Country of Origin of the product. This can be determined by the Rules of Origin under the trade law.
  3. Rules of Origin are needed to determine the country of origin of each product and thus these rules are very crucial in the International Trade. For this purpose ‘Made in (Country)’ labels are attached to the products.
  4. One can always locate the ‘made in country’ labels while purchasing from the physical stores. However, the e-commerce portals do not provide the same. The e-commerce portals consists a lot of filters to find out the material, quality, care, etc of the products however, they do not provide a filter disclosing the ‘Country of Origin’.
  5. As on today, the entire country is united and is standing together showing allegiance to the nation, as an effect of the loss of lives of our soldiers owing to the India-Chinese conflict in the Ladakh region and thus are running a nationwide campaign pertaining to the boycott of all the Chinese products / applications through which China generates revenue in crores.
  6. The Indian consumers are still kept in dark by not disclosing the Country of Origin, for if the consumers do not know where the products are made, they cannot stop buying them or let the consumers make an informed decision.
  7. Until and unless the consumer is not aware about the country where the product is manufactured, they cannot walk on the path of boycotting Chinese items and promoting the local brands.

Government of India to mandate displaying ‘Country of Origin’ on e-commerce products

The government has asked ecommerce platforms such as Amazon and Flipkart to display the country of origin on new products listed by sellers on their sites by August 1 and legacy items by October 1 without stipulating a deadline against the backdrop of tensions between India and China following a border issue in June that left 20 Indian soldiers dead. In the current context, there is an anti-China sentiment so if there is labelling, it could potentially influence purchases. The Indian trade ministry’s Department for Promotion of Industry and Internal Trade (DPIIT), hosted an online meeting of e-commerce players. The DPIIT wanted the changes to be implemented by the end of July. However, no decision was taken. It was only a consultation and follow-up of the previous meeting. A deadline will be decided later because packaging issues come under the consumer affairs ministry.

Response by E-commerce Companies

  1. Representatives of as many as 30 ecommerce sites including Amazon, Flipkart, Jio, Shoppers Stop, Croma, Snapdeal, Lenskart, Paytm, Grofers, Tata Cliq, Pharmeasy, 1MG, HomeShop 18, Swiggy, Zomato and Medikabazaar attended the call.
  2. The companies raised points related to the feasibility of the move and lack of clarity in the Legal Metrology (Packaged Commodity) Rules.
  3. The companies sought more time to implement the changes. The platforms said the measures should be introduced in a phased manner with the involvement of manufactures and sellers in the process.
  4. E-commerce companies in India like Amazon’s local unit and Walmart’s Flipkart have begun to update their back-end systems to allow sellers to identify the country of origin on all new product listings on their platforms.
  5. While Flipkart is understood to have suggested a deadline of August 15 to implement the required backend changes, Amazon sought 2-3 months for the same.
  6. The changes would first be made for new product listings as it was difficult to do this for the tens of millions of products already selling on their platforms.

Issues that may arise in the implementation of the same

  1. E-commerce operators had previously asked the government to clarify the definition of “country of origin”, which they say remains vague as some products are assembled in countries including India but their components or raw materials sourced from another nation.
  2. Some executives said the move will put online sellers at a disadvantage, benefiting offline ones.
  3. Participants said that sellers can only reproduce what is on the package and the government needs to rope in manufacturers if they want details on value addition such as photograph of the label showing origin, assembly and other details
  4. E-pharma companies told the DPIIT that drugmakers had specific exemptions under the packaged commodity law. They told DPIIT that the compliance burden for this was on manufacturers and sellers.
  5. Smaller sellers will be worse hit due to increased compliance pressure, especially at a time when they are having trouble selling offline because of COVID-19 and other reasons and are looking to drive more of their businesses online.

Following the feedback, the government is also likely to review the Legal Metrology (Packaged Commodity) Rules that govern pre-packaged commodities and cover declarations about country of origin, date of manufacture, quantity, expiry date and manufacturer’s details among other information about the product.

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