'Country of origin' tag by e-commerce players may be an exercise in futility, say experts

A product may have components from different countries


Though e-commerce players have agreed to display 'country of origin' tag on each and every product being sold in India in the wake of the government move it make the tag mandatory, the tag may not mean much as a product may have components from different countries. Hence, it could be said that a product has been manufactured across multiple locations.

The government's aim was to bring awareness among the consumers of e-commerce firms about the country of origin—especially China—of the products they are buying. The whole exercise may be meaningless as a product may be made in China, Taiwan or Germany and the knocked-down version may be assembled back in India.

“One can question how relevant it is to say that the product is made in India. This is one important aspect that needs to be understood by the e-commerce players, sellers and buyers as a product may have components from different countries. Accordingly, the seller can declare the country of origin, and the e-commerce company has to invest energy in certifying the veracity of the information. The additional efforts by the e-commerce provider have costs associated and the same have to be borne by the buyers ultimately. Is this worth it? Very few buyers may value the information about the country of origin and hence the majority won’t like to pay the price for this additional information,” Aditya Narayan Mishra, director and CEO of CIEL HR Services, told THE WEEK.

Currently, the barcode on certain products contains the information about the country of origin. “If a product is cheap and useful, the Indian customer will be willing to buy that despite the country of origin. They may not be willing to pay more for a product that has been assembled in India. Today, country of origin does not hold any good for any product as it has components from all over the world, making the overall exercise futile,” remarked B.S. Murthy of Leadership Capital.

When contacted by THE WEEK both Amazon and Flipkart refused to comment on the move. Media reports say that Amazon has made it compulsory for all its sellers to display the 'country of origin' of new and existing product listings. However, it needs to be observed that the 'country of origin' tag won't have much of an impact on a consumer's buying decision. “ Will the consumer's decision sway, that's a moot point. Because consumers are utility maximising individuals. For a government's policy to imagine that consumers will be willing to pay higher prices for non-Chinese products, and are thus willing to decrease their own welfare, is slightly factious,” observed Alok Shende of Ascentius Consulting.

Meanwhile, the Confederation of All India Traders (CAIT) has hailed the decision of Amazon asking its sellers to display 'country of origin' for all products listed on its platform. The CAIT said the component of value addition should also be adhered to without any further delay. “We had raised this demand on June 15, 2020, in a communication sent to Union Commerce Minister Piyush Goyal. Taking an immediate cognizance of the issue, the government made it mandatory for its GeM (Government e-Marketplace) portal to display the 'country of origin' by each seller followed by mandating the e-commerce portals to apply the same on their respective platform,” said Praveen Khandelwal, CAIT secretary general.

“It will enable the customer to know what items he is purchasing. The Legal Metrology Act was amended in 2017, making it compulsory for e-commerce companies to display country of origin. It is astonishing that for three years, no effort was made by these e-commerce companies to implement such a legal binding. It is when we raised the issue on June 15, followed by convening a meeting by DPIIT with e-commerce companies, that the law was implemented. Other e-commerce players besides Amazon should also follow suit immediately. We will again call upon DPIIT to compel e-commerce companies to follow the law,” added Khandelwal.