Monthly Archives: April 2012

Legal Requirements To Start An E-Commerce Website In India

Legal Requirements To Start An E-Commerce Website In IndiaWe have been receiving lots of queries regarding successful and legal opening of e-commerce business in India. We have already explained the legal formalities required for starting e-commerce business in India. In this article we would discuss the legal requirements for starting an e-commerce websites in India.To start with, we would like to say that we have no dedicated e-retailing laws and regulations in India and they are still evolving. The Information Technology Act 2000 (IT Act 2000) governs the online issues of e-commerce in India.

IT Act 2000 is the sole cyber law of India. The cyber law of India mandates that the e-commerce entrepreneurs and owners must ensure cyber law due diligence in India. The cyber law due diligence for companies in India has already become very stringent and many foreign and Indian companies and websites have been prosecuted in India for non exercise of cyber due diligence.

E-commerce entrepreneurs and owners in India must understand that legal issues of e-commerce in India are different for different categories of e-commerce. For instance, electronic trading of medical drugs in India requires more stringent e-commerce and legal compliances as compared to other e-commerce activities. Digital communication channels for drugs and healthcare products in India are scrutinised more aggressively than other e-commerce activities. In fact, regulatory and legislative measures to check online pharmacies trading in banned drugs in India are already in pipeline.

The legal requirements for undertaking e-commerce in India also involve compliance with other laws like contract law, Indian penal code, etc. Further, online shopping in India also involves compliance with the banking and financial norms applicable in India. For instance, take the example of PayPal in this regard. If PayPal has to allow online payments receipt and disbursements for its existing or proposed e-commerce activities, it has to take a license from Reserve Bank of India (RBI) in this regard. Further, cyber due diligence for Paypal and other online payment transferors in India is also required to be observed.

Perry4Law and Perry4Law Techno Legal Base (PTLB) recommend that all e-commerce entrepreneurs and owners must do a proper techno legal due diligence before opening an e-commerce website. The Internet intermediary liability in India may be frequently invoked against e-commerce websites in India. The Information Technology (Intermediary Guidelines) Rules 2011 prescribes stringent liabilities for e-commerce websites in India. Further, e-commerce websites in India must ensure privacy protection, data protection, data security, cyber security, confidentiality maintenance, etc as well.

Regulatory And Legislative Measures To Check Online Pharmacies Trading In Banned Drugs In India

Regulatory And Legislative Measures To Check Online Pharmacies Trading In Banned Drugs In IndiaOnline pharmacies are flourishing world over including India. The Indian market share of online pharmacies has been increasing thanks to the growing use of Internet in India. However, this has also created legal and medico legal problems as well.

We have no dedicated e-retailing laws and regulations in India. Further, we also do not have any dedicated e-health laws and regulations in India. In fact, e-health in India is facing legal roadblocks and in the absence of regulatory and legislative measures, online pharmacies are growing unregulated. In the present circumstances, the legal enablement of e-health in India is urgently required.

However, even more grave are the concerns originating out of the use of e-trading for medical and non medical drugs in India. E-trading of medical drugs in India must be undertaken only after complying with the laws of India. There are many cyber laws due diligence requirements in India that e-traders of medical drugs in India must comply. Similarly, foreign websites targeting India for this purpose must also comply with Indian law in order to do legitimate business in India.

There are many online pharmacies that are trading in banned drugs in India as well. Realising the potential dangers arising out of the same, the Indian government has recently constituted a high-level committee to suggest regulatory and legislative measures to check online pharmacies trading in banned drugs in India.

The committee has been set up under the Narcotics Control Bureau (NCB) of India to check such sale of banned drugs in India and to prevent black money and finances criminal activities through online transactions. The committee has been constituted as a part of the new drugs policy recently revealed by Finance Minister Pranab Mukherjee.

However, online pharmacies are by their very nature technology driven. So the approach of Finance Ministry must be techno legal in nature. Fortunately the committee has proposed to establish “cyber patrol units” to intercept syndicates and individuals indulging in such criminal activities over the Internet.

Another good aspect of the proposed legislative initiative is the proposal to route and inspect international mail (containing contraband couriers) while ensuring active cooperation and exchange of information with other enforcement agencies like CBI, DRI and ED, within the country.

Perry4Law and Perry4Law Techno Legal Base (PTLB) welcome this move of Finance Ministry and proposed committee and we wish all the best to them in this regard.