DEPARTMENT OF LAW, PRESTIGE INSTITUTE OF MANAGEMENT & RESEARCH

SCOPE OF E-BUSINESS IN INDIA AND REGULATIONS

CYBER LAW PROJECT

SUBMITTED IN THE PARTIAL FULFILLMENT OF B.A.LL.B., NINTH SEMESTER

SUBMITTED TO:- SUBMITTED BY:-

ADV. AMAY BAJAJ SHIVAM MADHWANI

Scholar No: 11110100056

TABLE OF CONTENTS

INTRODUCTION...........................................................................................................................3

TYPES OF E-COMMERCE...........................................................................................................4

SCOPE OF E-COMMERCE IN INDIA..........................................................................................5

REGULATORY LANDSCAPE FOR E-COMMERCE FIRMS IN INDIA...................................6

CASE STUDY ON E-COMMERCE..............................................................................................9

CONCLUSION................................................................................................................................9
INTRODUCTION

E-commerce and e-business are not solely the Internet, websites or dot com companies. It is
about a new business concept that incorporates all previous business management and economic
concepts.

"E-business" is defined as the application of information and communication technologies (ICT)

which support all the activities and realms of business. E-business focuses on the use of ICT to
enable the external activities and relationships of the business with customers. Electronic
business methods enable enterprises to link their internal and external data processing systems
more efficiently and flexibly and serve better to the needs and expectations of their customers. E-
business uses web-based technology to improve relationships with customers.

Electronic commerce (e-commerce) is relatively new, emerging and constantly changing area of
business management and information technology. Electronic commerce is sharing business
information, maintaining business relationships and conducting business transactions by means
of telecommunications networks. It is buying and selling of products and services by businesses
and consumers through an electronic medium, without using any paper documents. It is a type of
business model, or segment of a larger business model, that enables a firm or individual to
conduct business over an electronic network, typically the internet.

The term e-Commerce, which is frequently mixed up with the term e-Business, although, only
covers one aspect of e-Business, i.e. the use of an online support for the relationship building
between a company and clients. Electronic commerce can be broadly defined as the exchange of
merchandise (whether tangible or intangible) on a large scale between different countries using
an electronic medium – namely the Internet whereas E-business is the conduct of business on the
Internet, not only buying and selling but also servicing customers and collaborating with
business partners.
TYPES OF E-COMMERCE

There are different types of e-commerce vertices, and the same can be divided into broad
categories like B2B, B2C, C2B, and C2C business model:

1. B2B (Business-to-Business): One company doing business with another company using

internet-enabled devices, such as manufacturers are buying raw material from another
raw material manufacturer, or a distributor is buying online from a manufacturer. Such
B2B e-Commerce business is volumetric, and price varies based on the quantity of the
order and is often negotiable.
2. B2C (Business-to-Consumer): One company is selling goods or services online to the
general public typically through an e-Commerce website or mobile application, directly
to consumers over the Internet. An example of B2C portals includes Flipkart, Myntra or
Snapdeal. A B2C e-Commerce transaction would be an individual buying a pair of shoes
through Flipkart’s website. B2C can also relate to receiving information such as share
prices, insurance quotes, online newspapers, or weather forecasts. 
3. C2B (Consumer-to-Business): A customer posts his requirement on a website online,
and several companies review such requirements (RFQ) and quote on the project. The
consumer reviews all bids and finalizes the deal with the enterprise going to complete the
project. C2B business involves consumers seeking products or services from a
business/company. Like reservation in a hotel in a specific time period.
4. C2C (Consumer-to-Consumer): Many sites are offering free classifieds listing where
individuals can buy and sell thanks to the site such as OLX or Quikr, where people can
buy and sell stuff nearby. Such transactions are called consumer to consumer e-
Commerce. Where users sell products to other prospective customers. An example would
be someone selling something that he or she no longer needs, and he listed the same on
OLX, and another person who needs the same thing contacts the seller and get the
transaction done.
SCOPE OF E-COMMERCE IN INDIA

E-commerce stands for purchasing, selling, and exchanging goods or services using internet
enabled devices, where transactions or sale performed electronically. Electronic commerce
emerged in the early 1990s, and its use has increased at a rapid rate. 

In the emerging global economy, e-commerce and e-business have increasingly become a
necessary component of business strategy and a strong catalyst for economic development. The
integration of Information and Communications Technology (ICT) in business has
revolutionized relationships within organizations and those between and among organizations
and individuals.

With its effect of leveling the playing field, e-commerce coupled with the appropriate strategy
and policy approach enables small and medium scale enterprises to compete with large and
capital-rich businesses. On another plane, developing countries are given increased access to the
global marketplace, where they compete with and complement the more developed economies.

The scope of e-commerce in India has increased rapidly. There is a growing appetite for
international brands and better-quality foreign products amongst digitally connected Indian
shoppers due to rising income levels and increased awareness. Several categories including
lifestyle products, consumer electronics, clothing, footwear, jewelry and accessories, health and
beauty, household goods, art and collectibles, event tickets and online music are doing well for
online sales. Many analysts believe that the advent of 3G/4G speed in net connectivity has been a
major cog in the wheel for such a growth in this market.

Technology enabled innovations such as digital payments, hyper-local logistics, analytics driven
customer engagement and digital advertisements have enabled the e-Commerce industry in India
to grow at a much faster rate. Government initiatives such as Digital India, Skill India, Startup
India and Make in India are also contributing to the growth of the e-Commerce industry.

Kunal Bahl, co-founder and CEO of SnapDeal believes that e-commerce sector has risen
tremendously in India and that their success is proof of the rise in interest in online shopping.
PWC India leader Sandeep Ladda believes that the e-commerce sector in India has seen
unprecedented growth due to the advancements in mobile tech and that it will be the go to
platform for e-commerce businesses in the future. PayU co-founder Nitin Gupta opines that the
brick and mortar businesses will join hands with the e-commerce websites feeding off each other
in a win-win situation and with online wallet, cash back and coupon websites becoming more
and more popular in India, hassle free functioning is assured which will bring more success to e-
commerce in India.

REGULATORY LANDSCAPE FOR E-COMMERCE FIRMS IN INDIA

In India, legal issues and compliance related to e-commerce vary as per different business

models. To start an e-commerce business, companies must pay attention to the following legal
and regulatory matters.

1. Business license for online firms

Online businesses in India must obtain relevant licenses and registration from federal and state
government authorities before they establish their online presence. Some of the important
licenses include:

a. Tax registration;
b. Sole proprietorship registration;
c. Shops and Establishment registration;
d. Registration under social security legislation; and
e. Partnership registration, if applicable.
f. Different e-commerce services require different licenses and registration in India.
Therefore, it is advisable for online businesses to seek professional support or outsource
their legal obligations to a third party.
2. Intellectual property

Since e-commerce platforms constantly generate valuable intellectual property (IP) in the form

of updated technology, branding, design, software, and other material – it is absolutely essential
for such entities to understand their IP rights and ownership status, and stay abreast of the latest
regulatory changes.

IP violations are a common concern for e-commerce businesses as it is difficult to monitor

violations globally.

To protect online businesses against anonymous IP infringers, Indian law allows companies to
seek ‘John Doe’ orders. This provision allows a company to protect its possible IP loss due to
copying and publishing, against an unknown person.

Further, India has an established ‘cyber cell’ under its police department to tackle issues related
to cyber security. Matters such as hacking, virus dissemination, software piracy, credit card
fraud, and phishing can be registered under this cell.

3. Online data protection

Online sales require an exchange of personal data from the buyer to the seller, and so it becomes
very important for businesses to pay attention to the country’s relevant privacy and data
protection laws.

The use of personal information on the web in India is governed by the Information Technology
(IT) Act of 2000, while other aspects of online businesses are covered under laws such as the
Payment and Settlement Systems Act of 2007 and the Consumer Protection Act of 1986.

The IT Act imposes legal obligations on entities operating online to have a defined privacy
policy, maintain reasonable security practices and procedures, and obtain specific consent from
its website users regarding the use of their personal data – before making any disclosure. Further,
online platforms need to provide an option to their users regarding nondisclosure of personal
information shared. 

4. FDI regulations for e-commerce

In India, foreign direct investment (FDI) rules for e-commerce is complicated: up to 100 percent
under the automatic route is permitted in Business to Business (B2B) firms but FDI in Business
to Consumer (B2C) e-commerce firms are permitted only under certain circumstances.
This has resulted in innovative and complex e-commerce models to overcome the restrictions. A
‘marketplace’ (B2C) model implies that the entity is only a facilitator and cannot hold inventory
that it sells, as is the case under ‘inventory based’ (B2B) model.

Additionally, certain conditions apply:

a. Companies must not have more than one vendor account for more than 25 percent of
sales on their marketplace; and,
b. Companies must not directly or indirectly influence the sale price of goods being sold
5. Information Technology Act, 2000

The Information Technology Act, 2000 (“IT Act”) deals with contractual aspects of use of
electronic records. The validity of electronic transactions is established under the IT Act. The act
establishes that an ecommerce transaction is legal if the offer and acceptance are made through a
‘reasonable’ mode. The objectives of the Information Technology Act, as outlined in the
preamble, are to provide legal recognition for E-commerce transactions. The Act lays down
procedures for networking operations and for civil wrongs and offences. The Indian Information
Technology Act does not have any express provision regarding the validity or formation of
online contracts.

For instance, a communication sent by an offeror to an offeree through indirect means, such as
an email that passes multiple servers and spam mails, is not regarded as a reasonable mode under
the IT act. Reasonable modes of acceptance in an ecommerce transaction are:

a. Direct mail from the offeree to the offeror.

b. Acceptance by conduct, which is pressing an ‘Accept’ button to an offer.

The IT act governs the revocation of an e-commerce offer and acceptance. An e-commerce
transaction is said to be complete when the offeror receives acknowledgment of the receipt of the
offer. Besides, an offeror has the liberty to terminate an offer, provided its acceptance has not
been communicated by the offeree.

The Information Technology Act was amended in 2008 to increase security of e-commerce
transactions, with special provisions for legal recognition of digital signatures and electronic
documents. Section 43A of ITAA holds ecommerce companies accountable for protection of
personal data.

When an ecommerce company fails to protect personal data of its customers or is negligent in
maintaining and implementing reasonable security practices, and if these results in wrongful loss
of an online buyer, the laws are clear that its body corporate is wholly liable to pay the damages
by means of monetary compensation.

CASE STUDY ON E-COMMERCE

Hill v. Gateway 2000, Inc., 105 F.3d 1147 (7th Cir. 1997)

The facts of this case consider the situation of terms-in-the-box contracts. Mr. and Mrs. Hill
ordered a Gateway 2000 computer system. When they received this computer system, along with
the packet of warrantees was an arbitration agreement, which precluded Plaintiffs from bringing
any action against Defendant, other than in the forum of arbitration. Hill was dissatisfied with the
purchase and he filed a suit in federal court. The district court refused Gateway’s request that it
honor the arbitration clause, holding that the record did not support a finding of a valid
arbitration agreement, or that Hill had adequate notice of the arbitration clause.

This case follows the same logic as the “shrink-wrap license” cases. Shrink-wrap license
agreements typically involve notice of the agreement on the product packaging, inclusion of the
full terms of the agreement inside the packaging, and prohibit access to the product absent an
express indication of acceptance. Under such cases the contract does not form at the time of
purchase; generally it forms when the purchaser makes the express indication of acceptance, for
example by declining to return the product within a specified period of time.

CONCLUSION

Inspite of few challenges, still e-Commerce is booming day by day and sooner will become
the drastic demand of the users.
It is recognized that in the Information age, Internet commerce is a powerful tool in the
economic growth of developing countries. While there are indications of e-commerce patronage
among large firms in developing countries, there seems to be little and negligible use of the
Internet for commerce among small and medium sized firms.

E-commerce promises better business for SME’s and sustainable economic development for
developing countries. However, this is premised on strong political will and good governance, as
well as on a responsible and supportive private sector within an effective policy framework. 

E-commerce business in India has a tremendous scope and the future of e-commerce looks really
lively. E-Commerce has undeniably become an important part of our everyday life. The
successful companies of the future will be those who take e-commerce business seriously,
dedicating enough resources for development of e-Commerce solution and marketing their e-
Commerce business.