Protection of consumers in global economy

Aman Shukla, Lloyd Law College

Editor’s note:  

National economies no longer exist in a vacuum. There is an increasing economic interdependence of markets due to a rapid increase in cross border movement of goods, services, technology and capital. India prior to 1991 was largely monopolistic, with doors shut to foreign trade. It then removed trade barriers, and became a market of open competition. With emphasis on consumer satisfaction, and cut throat prices, small producers found it difficult to survive. Legislations were also created in order to protect consumers.


Global Economy is the result of increasing economic interdependence of national economies across the world through a rapid increase in cross border movement of goods, services, technology and capital. Moreover because of these movements the global trends have been changing since the last two decades. And if we talk specifically about the Indian nation that with the formation of the revolutionary policy of L.P.G in 1991, the Indian market has emerged as a powerful one in the picture of the globe. As the policy opened the doors for foreign investors to invest in India, it opened the door for foreign trade as well as the Indian economy which earlier was an inward looking economy now became a multidimensional economy. Prior to 1991 India had limited number of producers so it was a type of monopolistic market where sellers were few and buyers were many and certainly was a producers market, now with the removal of trade situation became opposite now it became a market of open competition where producers increased significantly, and because of which it became a “consumer oriented market” where consumer was the king pin .And slowly and gradually because of the increasing competition it became very difficult  to sell their product in the market; which ultimately led towards an era of “marketisation”. Marketisation which included the concepts of  advertisements  ,offers and ways to approach & attract consumers ,even many a times people use the term “consumerism” in place for it .And this is proved to be a very good step taken as in the initial stages the consumers were attracted by the way of advertisement & offers ,and it gave a positive effect to the market where a great share of the producers sale was  increased ,but this fact can also not be denied that this profit of manufacturers were limited to the royalty or the big business houses because it was very difficult for the small producers or traders to cut there already reduced margins; by spending them on advertisements or giving some attracting scheme to the costumers .Although the large business houses got a good result, but as these good result became better, they started the conquest to became the best, and in that conquest they used many malpratices for the sake of increasing their profitability even many malpractices came into scene where by the sellers used different ill-ways to reach their targets. But the ultimate result of these conquest was the outburst of anger of consumer’s who instead of neglecting the situation started making use of their rights as a consumer and used legal ways to protect themselves from the exploitation.

Legal protection

Legal protection of consumers means the safeguarding of innocent consumers from the greedy sellers; through the method of legal procedures and ways .As discussed earlier with the emergence of industrialization and increasing profits the producers many a times used unfair trade practices, which exploited the consumers, but before it was too long the government intervened and enacted several legislations and not only that it also strengthened a number of existing ones. And with the emergence of this new era it became all the more important to make changes in these existing laws and thereby strengthen the consumers of the country.

Need for protection mechanism

Nowadays we have several legislations, which are made solely for the purpose of safeguarding the interest of consumers. The legislations like C.P.A, S.O.G etc. not only protect the consumer but also keep a check on the practices of sellers. Then the question arose, “why do we need such type of laws?”

Now, the answer find its root way back in 1950’s,after the end of world war II when the peace process started many of the European were not economically strong; and to such type of nations the peace process gave a new platform where there was development of relations among nations ,which opened the pathway for business being done all around the world. And it was the very first time when the concept of global village came into picture; and as result of which slowly and gradually many nations took away their economic trade barriers .This also marked the start of the modern industralisation.

And when the stage was all set, there arise a problem, the developing nations who were relying on labour intensive were not getting good response due to lack in innovation and quality as compared to the wealthy nations which used the capital intensive approach. The sellers started making use of the technology which was developed at the time of war, which was both modern and cost effective and in this manner business flourished in the second half of the 20th century .And that is why the post war expansion is also known as “the golden age of capitalism”. The capitalist started befooling the consumer’s by different strategies, and due to it the government had to take steps in safeguarding the consumers. And by the dawn of 21st century which was also said as the age of information ,every country had its protection mechanism ready, but in place of reduction the rate of consumer exploitation increased with an increasing rate .One of the reason for it could be the outburst of information technology ,and access of internet to almost one-third of population .And today if we take a look on consumer forum(s) we would find long heaps of files and innumerable cases of exploitation .So ,it could be said that even after having a strong infrastructure for the protection of consumers, we still lack in its proper execution, as most of the people do not even have any knowledge about the existence of any law for the protection of consumers.

Past steps

The era of industrialization was at its peak during ‘70s and the latter half of the same decade started witnessing consumer grievances, though there were many legislations which were made even before the independence  like the sales of goods act etc. ,which served the purpose of the people that ,it cannot be said that there were no cases of consumer exploitation at that time, but they were few if we compare it to the ‘70s .And these circumstances created a situation where with ever case there was a new problem arising ,and that was when the revolutionary CPA was passed in the year 1986,and it gave several rights to the consumer, and it was also capable of handling any kind of case at that time, ,moreover it also had prepared a proper platform for the launching of the new economic policy after which India has also became a part of the economic global village;and it had removed all the trade barriers,which attracted the foreign players and it was presumed that with the rise in business the negatives related to it would also rise, and the same happened but with a different approach.Prior to the end of 20th century nobody would had ever thought of viewing such a vast variety of advertisements, also it was unimagined that you place an order online and you would receive your product at your doorstep without any additional charge;all the credit goes to information technology which had not only developed business but had also widened its reach but on the contrary if we take a look on the other side that this e-business had increased the rate of frauds and the most important thing to note here is that we have got our cyber security mechanism recently and it still is under development. Now the matter to be given stress is that though after several amendments our consumer protection act dates of 1986 when the consumers were “cheated” now they are “e-cheated”, so how far has the legislations bridged the gap.

Recent approaches

Today the atmosphere or the business environment is totally different, if we compare it from the last decade we would find that competition in the international market has increased very significantly, which has resulted into low profit margins and it is proved theory of business that whenever there would be low profit levels the only way to compensate it would be a notable increase in the sales level. Now , this is one of the reason why sellers use luring cutleries to sell their product. And this practice is in trend these days that is why we have innumerable cases on this issue. For ex- in the leading case of  Ajay Kumar v. Godfrey Phillips India where it was held that the defendant must stop the unfair trade practice and must issue a corrective advertisement by increasing the font of the statutory warning. This case is a clear cut example of the limits till which the sellers could publicize for their product.

Now if we analyze deeply we would come to know that though our legislations being strong and being amendment several times, still does not fulfill with the current situation as there is no awareness .The consumer protection act for example in the last 5 years has been amended a couple of times ,where in 2010 it emphasized on quicker disposal of consumer complaints followed by new provision which gave facility of filling cases online , and in 2011 it restricted the disclosing of personal information of a person to any other person. These amendments have undoubtedly strengthened the public as in our country most of the population is either negligent or is illiterate, so the foremost thing for us must be creating awareness among the masses. But in recent times one of the most revolutionary progress in the field of consumer protection has been the consumer organizations, which have not only organized the consumers but also created awareness among the people moreover they have also pressurized the business organizations for discontinuing there unfair practices and carrying out fair business .In this context the role of media cannot be neglected as they also through there power  have created awareness among the people and not only that they helped the consumers by taking there problems and grievances directly to the sellers with the help of programmes.

Ways forward

Now after analyzing the past and present, we have to make ways better for the consumers in future. The very first step which is required to be taken must be of awakening the masses and making them aware about the consumer protection laws and there rights though which they themselves can work for their interest and they would not be easily carried away .But there is no denial from the fact that rights carry some duties along with them, which are to be followed strictly. And as a consumer these duties can be-

1.Taking proper bills

2.Filling suit if there is a genuine grievance

3.Not be carried away by advertisements

4.Purchasing after due thinking

And if duties are followed sincerely by the consumer, it would surely lead to reduction in rates of suits being filled in consumer forum’s. But in country like INDIA where only 65% of population is literate it would be very-very tough fort the government to create awareness among the masses .So, the other steps which can also be taken is that of strengthening the NGO’s have deep knowledge about the type of grievance’s to the people, moreover they have deep roots in rural areas also as they are related field work also. They can serve as a great medium for delivering justice to innocent people as they can file suits on behalf of the illiterate consumers.

Moreover  if these type of registered consumer organization get aid from the government, then it would be very good for consumers, as then the organization would be able to increase its reach and will make the consumer’s organization aware about their rights which is the need of the hour.

Edited by Neerja Gurnani

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