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Centre notifies Consumer Protection (Direct Selling) Rules, 2021

Context:

Central Government in exercise of the powers by the Consumer Protection Act, 2019 has notified the Consumer Protection (Direct Selling) Rules, 2021.

Relevance:

GS-III: Indian Economy, GS-II: Governance (Government Policies and Initiatives)

Dimensions of the Article:

  1. About the Consumer Protection (Direct Selling) Rules, 2021
  2. What is Electronic Commerce (e-commerce)?
  3. E-commerce in India

About the Consumer Protection (Direct Selling) Rules, 2021

  • These Rules apply to all goods and services bought or sold through direct selling, all models of direct selling, all direct selling entities offering goods and services to consumers in India, all forms of unfair trade practices across all models of direct selling and also to also to a direct selling entity which is not established in India, but offers goods or services to consumers in India.
  • The rules lay down duties and obligations of both direct selling entities and their direct sellers to “safeguard the interest of consumers’’.
  • It directed State governments to set up a mechanism to monitor or supervise the activities of direct sellers and direct selling entities.
  • However, the direct sellers as well as the direct selling entities using e-commerce platforms for sale shall comply with the requirements of the Consumer Protection (e-Commerce) Rules, 2020.
  • Direct selling companies will need to establish an adequate grievance redressal mechanism.
  • Direct selling companies or their direct sellers cannot persuade consumers to make a purchase based upon the representation that they can reduce or recover the price by referring prospective customers to the direct sellers for similar purchases.
  • These new rules bring clarity in the marketplace and would give impetus to the direct selling industry, which is already providing livelihood to over 70 lakh Indians, in which more than 50% are women.

What is Electronic Commerce (e-commerce)?

  • Electronic commerce or e-commerce (sometimes written as eCommerce) is a business model that lets firms and individuals buy and sell things over the internet.
  • E-commerce, which can be conducted over computers, tablets, or smartphones may be thought of like a digital version of mail-order catalog shopping.
  • Nearly every imaginable product and service is available through e-commerce transactions, including books, music, plane tickets, and financial services such as stock investing and online banking.

E-commerce in India

  • Propelled by rising smartphone penetration, the launch of 4G networks and increasing consumer wealth, the Indian e-commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion in 2017.
  • India’s e-commerce revenue is expected to jump from US$ 39 billion in 2017 to US$ 120 billion in 2020, growing at an annual rate of 51%, the highest in the world.
  • The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second-largest e-commerce market in the world by 2034.

-Source: PIB

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September 2022
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