India: Proposed Amendments To The Consumer Protection Act, 1986

India has been a consumption-driven economy for the last many decades and as per the Ministry of External affairs, Government of India, the Consumer spending in the country is expected to increase about 2.5 times by 2025. The Ministry quotes that it is expected that the consumer durables market will expand at a compound annual growth rate (CAGR) of 14.8 per cent to US$ 12.5 billion in FY 2015 from US$ 7.3 billion in FY 2012. Urban markets account for the major share (65 per cent) of total revenues in the Indian consumer durables sector. In rural markets, durables, such as refrigerators, and consumer electronic goods are likely to witness growing demand in the coming years. From US$ 2.1 billion in FY 2010, the rural market is expected to grow at a CAGR of 25 per cent to touch US$ 6.4 billion in FY 20151.

With such positive probabilities, the Government is emphasizing on reforming Indian market into a strong potential market in the global strata. The consumer affairs ministry realizes that there has been a growing feeling that consumers do not get quick redressal and framework available is lagging behind. There is also a need align the framework in line with global best practices and new business practices that have cropped up2 . Hence, it is proposed to create an agency similar to the US Federal Trade Commission, known as the Consumer Protection Authority. So as to strive at the objective, recently on 5 November, 2014, the Ministry of the Consumer Affairs issued a draft which discusses the proposed amendments to the Consumer Protections Act, 19863 ("Act").

Consumer Protection Authority

A new Chapter III after the existing Chapter- II is proposed to be added to the Act which establishes an executive agency, namely "Central Consumer Protection Authority" that enables prevention of exploitation of consumers and violation of their rights and to promote, protect and enforce the rights of consumers. The basic objectives of the formulation of such a body are i) to protect and enforce the rights of consumers such as the right to be protected against the marketing of goods / products and services which are unsafe or hazardous to life and property, ii) the rights to be informed about the quality, quantity, potency, purity, standard and price of goods or services, iii) to prevent unfair trade practices as defined under Section 2(1)( r) of the Act, iv) to ensure that no advertisement is made of any goods or services which is misleading or deceiving or contravenes the provisions of this Act and rules and regulations made under it and v) to ensure that no person engages himself in unfair trade practices or takes part in the publication of any advertisement which is false or misleading.

Inclusion of e-commerce transactions

In India, presently the e-commerce and online shopping market is gaining tremendous popularity. Online shopping sites offer their online shopping services to various cities and towns. The proposed amendment attempts to include e-commerce transactions under the ambit of the Act. Under the current consumer protection regime, a consumer can initiate legal action against a seller only in the place where transaction takes place. However seeing the increasing trend of online shopping in India, the Government planned to propose amendment to the Act in order to allow 'territory free' legal action against any goods or service provider.

Mediation process

It is noteworthy that the proposed amendments also include the process of mediation by inserting a new Section 2(1)(ja) which means the process by which a mediator( appointed by the National Forum or a State Forum or a District Forum, as the case may be), mediates the dispute between the parties to the complaint/ appeal made by the application of the provisions as specified under Chapter IV of the Act and in particular:

  • by facilitating discussion between parties directly or by communicating with each other through the mediator,
  • by assisting parties in identifying issues, reducing misunderstandings, clarifying priorities, exploring areas of compromise, generating options in an attempt to solve the dispute; and emphasizing that it is the parties' own responsibility for making decisions which affect them.

Product Liability

The proposed amendments to the Act include a new chapter on the product liability which embraces provisions related to actions brought for or on account of personal injury, death, or property damage caused by or resulting from the manufacture, construction, design, formula, preparation, assembly, testing, service, warning, instruction, marketing, packaging, or labeling of any product. Further, the proposed amendment is set to introduce product liability charges even in cases like train or flight delays. Instead of just refunding the amount paid, the service providers will be liable for punitive action, fine and compensation.

Apart from above proposed amendments, there are further noteworthy proposed amendments which suit the requirement of today's advanced and cyberoriented market. For instance, the scope of the definition of the term "complaint" is widened to include an additional condition stating a complaint means any allegation in writing made by a complainant that he has suffered a loss due to an unfair contract entered into by him. The proposed provisions are intended to protect the consumers who are placed in an unequal bargaining capacity.

Advertisement

The Act specifies that a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provisions of any service, adopts any unfair method or unfair or deceptive practice which includes permitting the publication of any advertisement whether in any newspaper or otherwise, for the sale or supply at a bargain price, of goods or services that are intended to be offered for sale or supply at the bargain price, or for a period that is, for sale or supply at the bargain price, or for a period that is, and in quantities that are, reasonable, having regard to the nature of the market in which the business is carried on, the nature and size of business, and the nature of the advertisement.

In order to make the existing provisions related to advertisement more effective, the proposed amendments have defined the term "Advertisement" which means any audio or visual publicity, representation or pronouncement made by means of any light, sound, smoke, gas, print, electronic media, internet or website and includes through any notice, circular, label, wrapper, invoice or other documents.

Conclusion

India is likely to emerge as the world's largest middle class consumer market with an aggregated consumer spend of nearly US$ 13 trillion by 2030, as per a report by Deloitte titled 'India matters: Winning in growth markets4 . The proposed amendments address various issues which remained unaddressed under the current consumer protection regime. Upon implementation of these amendments to the existing laws, the consumer laws of the country will not only get stronger but also will help India to outshine in the global strata with a stronger consumer driver- economy.

Footnotes

1. http: //indiainbusiness.nic.in/newdesign/index.php?param=economy_landing/415/1

2. http://articles.economictimes.indiatimes.com/2014-09-11/news/53811492_1_consumer-protection-act-consumerdisputes-district-consumer-forums

3. http://consumeraffairs.nic.in/consumer/writereaddata/Comp%20Statement%20CP.pdf

4. http://www2.deloitte.com/uk/en/pages/internationalmarkets/articles/india-matters-winning-in-growthmarkets . Html

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