Country of origin legal conundrum regarding government boost received by Flipkart and Amazon


introduction

In a multilateral forum, rules of origin in trade in services are largely underdeveloped. The government has expressed interest in developing rules of origin in trade to prevent trade diversion and limit third party access. There can be several ways to establish the origin of goods and services in trade. The nationality of the service or service provider is a very important criterion which can establish the origin of the services. Identifying the nationality of the good or services concerned not only plays a crucial role in regulating market access and law enforcement, but also aids in the navigation of international trade.

Over the past 5 years, e-commerce regulation has been a major concern, and various industry specific laws have been drafted and proposed by the Legislative Assembly. However, these laws are still confusing when read with various court orders. The demand for country of origin specification has gained in importance thanks to new initiatives such as “Atma Nirbhar Bharat” and “Make in India”. The government electronic marketplace has become an important part of these initiatives. Concerns about showing product origin discussed with various e-commerce giants and this meeting led to a policy that requires listed sellers to specify the country of origin.

Country of registration

Country of origin refers to representatives of the country of manufacture, production design, or origin of the brand from which the product originates. For multinational brands, the country of origin can include several countries that refer to the value creation process. Although there have been Indian laws and regulations that talk about statutory provisions regarding declaration of country of origin or country of manufacture on products, but no laws deal with posting and disclosure of country of origin. ‘origin on the seller’s website. The main reason why this is gaining in importance is the “Atma Nirbhar Bharat” initiative and the efforts of the Indian government to reduce dependence on imported goods and services.[1]

According to the rules of legal metrology (packaged products), 2011, the declaration of the country of origin or the country of manufacture or assembly on imported products is required.[2] It’s about putting an end to false and misleading claims that mislead consumers and customers and providing them with full product information. The Geographical Indications of Goods Registration and Protection Act 1999 also speaks of the requirement to indicate the country or place in which they are produced or the name and address of the manufacturer under Article 71. The central government must notify in the gazette. Section 23 of the General Clauses Act 1986 refers to the notification and establishment of the rule or regulation. Notification under section 71 will not apply to goods imported into India and approved by the Commissioner of Customs who authorized transit through India.[3]

Objectives of country of origin marking

There are many goals behind making country of origin marking mandatory. Trademark forgery is the main reason why the country of origin should be marked, as it will prevent locally produced goods from being passed over as imported goods. it would also promote localization as local identity is not required to enforce Indian laws. Other technical solutions for execution are also available. The country of origin marking will also make it possible to control the parallel importation of goods into the domestic market. Product evaluation and product purchasing decisions are also made with reference to the country of origin. However, this rule will also hamper the progress of small sellers, as such compliance issues in selling products online will affect their businesses during the pandemic.

Under the Information Technology (IT) Law and Consumer Protection Rules on Electronic Commerce, the Intermediate Directives provided for mentioning localization by foreign markets. The digital platform allows buyers to systematically discover products. Rule 5 of the consumer protection rules talks about providing any other information necessary to enable the consumer to make informed decisions before buying. An opinion was issued by the Delhi High Court to the central government regarding the implementation of the Legal Metrology Act 2009 and the rules set out in the law. These rules make it compulsory to display the country of origin of products sold on E-Commerce sites.[4]

The basic product rules of Legal Metrology 2017

Under these rules, any packaged product consumed by citizens should contain a detailed description of the package. Details should include a description of quantity, date of manufacture, expiration date, weight, statutory warning, etc. These rules were drafted by the legislator to ensure that the consumer who buys the product has knowledge and information. This information builds trust between the consumer and the manufacturer and promotes transparency. It is the responsibility of the manufacturer to provide accurate information and it is responsible for incorrect information provided. The information provided also makes it possible to monitor fraudulent companies so that dangerous products are not sold on the market. The country of origin should also be mentioned on the packaging and the location address if the manufacturer is Indian should be given a PIN code. E-commerce activities are also included in the 2017 amendment and these entities should follow the mandatory declaration except for the date of manufacture or packaging. It is the responsibility of the service provider in e-commerce businesses to obtain the list of contact details from the seller. In the event of violation of these guidelines, a sanction may also be imposed. The new amendment includes features related to metrics.

To reduce dependence on imports from China, E-Commerce companies have been asked to display the country of origin of services and products sold on their platform. Businesses said they needed time to comply with the rules. Until then, no product would be banned from sale. The main purpose of the country of origin designation is to help consumers make informed choices. The portal used by government departments for the procurement of goods known as the Government e-Marketplace has also made it mandatory for sellers on the platform to mention the country of origin when registering products. The biggest e-commerce website such as Flipkart and Amazon mentioned that listing the country of origin would be difficult for sellers as the definition of the country of origin is still uncertain. Besides, adding a country of origin to the old list would be a colossal task.

Government electronic marketplace

The government electronic marketplace was launched to take a step forward towards Atma Nirbhar Bharat. The seller is required to enter the name of the country of origin to register new products on the government electronic marketplace. The initiative also includes a provision that will indicate the percentage of local content in products. The initiative aimed to promote “Make in India”. the seller must regularly update the country of origin so that his product is not deleted from the platform for lack of update. The portal facilitates the entry of small local vendors into the market. The government procurement standard has been changed by the government so that companies whose goods and services contain 50% local content have the highest preference.[5] This initiative aimed to empower the country and promote Make in India. Government e-Marketplace also provides additional features such as a search engine and faster creation of product and service categories. The portal was launched in 2016 by the central government and all government agencies of public sector units can source their products. This portal also offered tribal communities the opportunity to make the product they were making available for purchase. These include paintings, handmade art, statues, etc. for public procurement. The services listed on the portal include transportation, logistics, waste management, automotive, office stationery, etc.

Flipkart and Amazon

The Indian government has notified Flipkart and Amazon not to display information that includes country of origin on products sold on platforms in India. Notices were sent by the Department of Consumer Affairs, Ministry of Consumer and Food and Public Distribution regarding the non-compliance.[6] The government has requested a response from these platforms and in the absence of sufficient explanation, action would be taken against them in accordance with the laws and rules.

Since entering country of origin details is a huge task that involves collecting data and feeding it into the e-commerce market, displaying the main billboard image would be a better choice. which would provide all the information about the item including country of origin and net content. State governments have also been adopted by the Minister of Consumer Affairs to enforce the providence that obliges e-commerce players to display the country of origin on all products and services. The rules state that the country of origin must be mentioned on all items sold before September 30, 2020.

Conclusion

The country of origin list is part of the government’s plan to curb imports from countries like China due to the divide caused by border tensions. The feasibility of the move is questionable because there is a lack of clarity in the rules of legal metrology (packaged products). In addition, issues such as the coronavirus have hit micro, small and medium-sized businesses hard and there are several technological hurdles in implementing the requirements of the rules. Government deadlines also make implementation more difficult. The new lists must first be completed, then the update of the existing list must be carried out. This move will also put offline sellers in an advantageous position. Pharmaceutical companies are entitled to certain specific exemptions under the Packaged Products Act. The importance of measuring the country of origin also depends on the information the consumer has about the product they want to buy. The intention of the legislator is to protect consumers on platforms where the seller is not physically available. A model with the basic principles of law is necessary for self-regulatory bodies which create special laws revolving around a certain type of institution.


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