Explained: Why e-tailers are dragging their feet on the ‘country of origin’ tag.

Why-e-tailers-are-dragging-their-feet-on-the-country-of-origin-tag | ChineeKum | Cheeni Kum | Cheenikum | Chinee Kum

After the Galwan Valley incident, the Centre initiated talks with e-commerce giants in India like Flipkart, Amazon and Snapdeal to ensure that all merchandise listed on their apps and websites bear the ‘Country of Origin’ tag. This was part of the government’s strategy to check imports, especially from China. Earlier the Government e-Marketplace (GeM) had made it mandatory for sellers to declare the Country of Origin while registering new products on the GeM portal. Subsequently, in a meeting held on June 25 with the Department for Promotion of Industry and Internal Trade (DPIIT), the e-commerce companies stated that they are ready to comply with the new requirement, but they never agreed on a timeline.

When push comes to shove

In July, Amit Shukla, a lawyer moved the Delhi High Court to seek implementation of the Legal Metrology Act, 2009, which also mandated displaying country of origin on products sold online. The move to display the country of origin was aimed at helping consumers make informed choices. But it was easier said than done. 

In an article published by Livemint, a top executive of an e-commerce company said that, “The government doesn’t want to give a timeline to implement this, as it could adversely affect the seller and e-commerce ecosystem. But now, since this is a legal case, it will also mean a formal route will be charted for punishing the non-compliant sellers.” 

What this means is that, if required, the government can force the hands of e-commerce companies and ask them to delist their inventory, which may lead to a dip of approximately 25% in goods listed online. The government can even use the Legal Metrology Amendment Rules, 2017 to penalise sellers who do not comply. E-commerce companies have started implementing the new guidelines issued by the government, but considering the sheer number of products, we won’t be surprised to see this whole exercise go on for another 4-5 months. 

The compliance challenge

Thanks to Mr Amit Shukla’s proactiveness, e-commerce companies have directed their sellers to display the country of origin, in the new and existing product listings, as per the Legal Metrology Act. However, based on our research, we found that making a rule mandatory and implementing it are two different things. We looked up some random listings online on Flipkart and Amazon and found that the country of origin tag was present only for recently launched products. 

The challenges don’t just end there. Multiple sources of products are also making it difficult for sellers to categorise the name of the country as they face issues in ascertaining the exact origin of the product. In the case of resellers, what can the marketplaces do? They usually source their products from a wholesaler. So, in that case, should they mention the source of the wholesaler or the source of their own purchase? Clarity on many such issues are still lacking, and as of now, no official notification has been released by the government since July regarding this matter.

Our observations

Last month, two leading e-tailers asked sellers to display the country of origin in their product listings, adding that providing inaccurate country of origin might lead to delisting. We don’t know the exact date from which Amazon and Flipkart began mentioning the country of origin on their site, but there is one thing we know for sure; Amazon had mandated its sellers to update the country of origin tag by August 10. And as of the publication of this article, neither Flipkart nor Snapdeal, have set any deadline for their sellers to follow.

That said, we did notice one more thing. For a company with no official deadline, Flipkart has integrated the country of origin tag to their listings in a slightly better way than Amazon. Also, the information was relatively easy to find on Flipkart, but the same can’t be said about Amazon and Snapdeal. These two companies have not made any visible effort to show the country of origin, even after almost two months since the ruling.

Flipkart mentions the country detail in a section called ‘Manufacturing, Packaging and Import Info’, under the ‘Specifications’ section of a listing. For some products such as branded mobile phones, Flipkart also provides the details of the importer and packers besides the manufacturer. However, things are a little different on Amazon. In the case of products from India, Amazon mentions ‘Made in India’ right in the title of the product, likely with the aim to promote locally sourced products. However, in the case of products of foreign origin, Amazon mentions the country of origin further below – as if it is a deliberate attempt to make it difficult for the customer to access this information.

What happens next?

The government has set September 30 as the deadline for e-commerce companies to complete the assigning of the ‘Country of origin’ tag for both new and existing items listed on their platforms. This comes after e-commerce trade unions sought another 6-7 months in extensions to comply with the rules. 

It is obvious that the companies are not too keen about implementing this rule. It will hurt their business because a bulk of these products have some or the other connection with China. And given the current state of our economy, the firms must be feeling confident that the government won’t enforce large penalties on them. Why? Because it might affect many dependent SMEs and ultimately end up hurting the government’s $5 trillion economy dream. And going by the online shopping festivals held recently, it is quite evident that ‘Boycott China’, for most e-commerce companies are just hollow words.

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