Why E-Commerce Giants Are Dragging Their Feet On Country-Of-Origin Rules 

Why E-Commerce Giants Are Dragging Their Feet On Country-Of-Origin Rules 

by R Jagannathan - Thursday, July 9, 2020 12:52 PM IST
Why E-Commerce Giants Are Dragging Their Feet On Country-Of-Origin Rules An Amazon pickup point in India. Representative image (Pradeep Gaur/Mint via Getty Images)
  • There is no case for delaying deadlines on point-of-origin information.

    The e-commerce giants are merely playing for time in the hope that the government will change its mind. That should not happen.

E-commerce companies are resisting the efforts of the Department for Promotion of Industry and Internal Trade (DPIIT) to include point-of-origin information in all the products they sell on their platforms. The department wants this information included in all new product listings by 1 August, and all products by 30 September.

The e-commerce companies are arguing that they can’t do this logistical exercise in such a short time, since they have lakhs of vendors and millions of products. They want three months’ time to implement the new policy.

While it is nobody’s case that genuine implementation issues should be ignored by the babus who man DPIIT, one has to separate the real reasons for the foot-dragging from the operational ones.

First, there is little doubt that an overwhelming number of products sold on these platforms are of Chinese origin. Putting in place a system that will flag Chinese products in searches and product information will mean a loss of potential revenues when anti-China sentiment is high among consumers.

The e-commerce companies clearly want to delay things so that after three months, if the sentiment cools down, they can go back to business as usual.

The DPIIT needs to make it clear that no matter what the final deadline is, country-of-origin requirements are not going to be diluted. The Indian consumer needs to know – and know for sure – if her purchases are feeding an enemy nation or a friendly one, or – even better – helping a domestic company which uses local raw materials and labour to produce a product.

Second, the logistical issues are simply exaggerated. Let’s assume a platform has, say, one million vendors. What is being sought by 1 August is not the entire information on all products sold by the vendor, but only the new ones. How complicated is it to do that?

The software tweak involved cannot take more than a week to create, for all we need is a pop-up (or info panel) serving this information whenever a product is searched and studied by the potential customer for a possible purchase. Information pop-ups, offers, special deals, and other such information are already part of the software. So are details about product features. Adding details of country of origin can hardly be a huge tech challenge.

The e-commerce giants may make it a big deal, but information about point of origin, and percentage of value additional locally are available with every vendor. All that needs to be done is to ask them to upload these details in an excel sheet and the e-commerce giants can feed the information into to their portals.

What e-commerce companies can draw the line at is to actually certify the details uploaded by a vendor. That is not the job of marketplaces. That is the job of government departments or consumer groups to verify and punish those providing wrong information.

At least for stage one, where DPIIT is merely asking for country-of-origin information for new products coming onto e-commerce platforms, the deadline is no big deal. Nor should stage two be a big deal – where such details are uploaded for existing products – since they still have more than a month-and-a-half to do so.

The real problem will come in stage three, where not only country-of-origin but also details about import content details may need to be given. That’s a logistical challenge one can understand.

Third, the simple point the e-commerce giants need to know is this: giving information is not a deterrent to anybody’s ability to sell his China-made products. Consumers come in all varieties, and there will always be demand for cheaper Chinese goods, even after they are so labelled. The main point is the consumer needs to know not just product, volume and price details, but who made them.

The issue that DPIIT needs to grapple with is internal: India needs to move the direction of dependence away from China no matter what happens in Ladakh or on the borders. Even if China pulls back from all the areas it has encroached upon, we still need to move away from China dependence on crucial imports.

That challenge is about more than merely indicating point of origin to consumers, since even US-owned brands like Apple or South Korean-owned ones like Samsung are made substantially if not fully in China.

On the other hand, Chinese brands like Oppo, Vivo, OnePlus and Xiaomi may be assembled in India, and claimed to be made in India. Consumers should target brands first, and then point-of-origin and Chinese import content.

The longer-term goal has to go beyond boycotts. We need a steady build up in domestic manufacturing capabilities where costs of doing business are brought down below Chinese levels, where domestic companies are encouraged to build scale and develop local supply chains, or enter into partnerships with chains that do not originate in China.

There is no case for delaying deadlines on point-of-origin information. The e-commerce giants are merely playing for time in the hope that the government will change its mind. That should not happen. China is a problem that won’t go away even after it moves back its defence build-up away from the positions it is currently occupying.

Jagannathan is Editorial Director, Swarajya. He tweets at @TheJaggi.
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