What are the basic regulations governing e-commerce in India?

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In India, e-commerce is primarily governed by the Information Technology Act, 2000 (‘IT Act’) and the rules issued thereunder, specifically the Information Technology (Intermediaries Guidelines) Rules, 2011. The regulations provided under the IT Act include rules regarding data protection and privacy, electronic signatures, and cybersecurity.

In addition to the IT Act, e-commerce is also regulated by various other legal and statutory provisions:

1. Consumer Protection Act, 2019 (‘CPA’): The CPA provides protections for consumers buying products or using services through e-commerce platforms. This includes protection against unfair trade practices, rules around the exchange and return of items, and the prohibition of misleading advertisements.

2. Foreign Direct Investment (FDI) Policy: Under these regulations, FDI is permitted up to 100% in the automatic route for companies engaged in the marketplace model of e-commerce. However, FDI is prohibited in companies operating an inventory-based model of e-commerce.

3. Rules on Advertising: E-commerce entities have to comply with regulations set by the Advertising Standards Council of India (ASCI) which prohibit misleading and false advertisements.

4. Competition Act, 2002: This Act is often relevant in e-commerce to ensure fair competition and prevent activities that have an appreciable adverse effect on competition in India.

5. Payments and Settlements Systems Act, 2007: This legislation influences e-commerce businesses using electronic payments systems.

6. Goods and Services Tax (GST) laws: These are relevant to any e-commerce operation as they regulate taxation on the sales of goods and services online.

In recent years, Indian regulators have increased their focus on online retail and e-commerce, resulting in more stringent guidelines. For instance, the draft National E-commerce Policy aims to provide a comprehensive framework for digital economy regulations, focusing on issues like data protection, consumer protection, data storage, and more.

E-commerce entities operating in India must be aware of these laws and ensure their operations are within their bounds to mitigate any legal risks. It’s advisable to seek professional legal counsel to ensure compliance.

One thought on “What are the basic regulations governing e-commerce in India?”

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