E-commerce has attracted great interest of various
stakeholders in India. We see lots of innovation and entrepreneurship
efforts in the field of e-commerce in India on regular basis. Some of
these e-commerce ventures are truly innovative and promising.
However, a dominant majority of these e-commerce ventures and
websites are flouting the laws of India while conducting their
businesses in India.
There is a general misconception that e-commerce in
India can be operated without any legal compliances. This is not true
as there are various legal
requirements that must be complied with in order to run an
e-commerce business in a legal manner. According to Perry4Law,
a New Delhi based techno legal corporate and ICT law firm,
“E-Commerce in India requires compliance with various Statutory
Laws of India. The chief among them are the Cyber Law of India,
Indian Contract Act, Privacy and Data Protection Regulations, Cyber
Security Regulations, Foreign Investments Regulations, etc.”
However, Indian e-commerce websites are not
complying with Indian laws and there is an urgent need to suitably
regulate Indian e-commerce. Indian government has already
started working in this direction and e-commerce
business structuring in India may be regulated
accordingly. India has also declared
that foreign companies and e-commerce portals would be required to
register in India and would be required to comply with Indian laws.
There are some areas where e-commerce websites of
India are in direct conflict with Indian laws. These include non
observation of cyber
law due diligence (PDF), e-commerce
due diligence and foreign exchange management act (FEMA)
compliances. Even Indian government is well aware of these
irregularities and illegalities and it waited for long to initiate
any action against the guilty e-commerce websites. Now enforcement
directorate has started investigation against many e-commerce
websites and their owners for possible violation of provisions of
FEMA.
According to Praveen
Dalal, managing partner of Perry4Law, the legal position
is that Foreign Direct Investment (FDI) is not allowed in India for
Business to Consumer (B2C) Multi Retail E-Commerce Activities.
However, almost all E-Commerce Websites of India have accepted
Foreign Funding and utilised them for their E-Commerce Businesses in
direct violation of Indian Laws. They have tried to circumvent Indian
Laws by showing it as a funding for advertisement and other expenses
but this labelling would not change the “True Nature” of the
transaction, opines Dalal. Besides, there are other Techno Legal
Compliances that these E-Commerce Websites have failed to comply with
and these Irregularities and Illegalities would be investigated by
Indian Government very soon, informs Dalal.
Now it is for the e-commerce website owners to show
that they did not violate any law of India. However, this would be a
tall claim as clearly they are on the wrong side of Indian laws.
