Discuss the liability of e-commerce marketplaces for third-party listings of regulated goods. Is a 'safe harbour' approach adequate for India's security needs?

In 2026 the Central Consumer Protection Authority (CCPA) acted against platforms that listed ammonium nitrate, PETN, picric acid and gunpowder without authorisation. The platforms disclosed 3,940 sellers [1]. This shows that liability for third-party listings of regulated goods cannot rest on passive hosting. For such goods, safe harbour must be conditional, not automatic.

Current liability framework

• Conditional immunity: The E-Commerce Rules, 2020 apply to marketplace and inventory models alike. They require marketplaces to take a seller undertaking that listings are accurate [3].
• Consumer-law route: CCPA treated unlicensed explosive listings as misleading advertisement (Sec 2(28)) and unfair trade practice (Sec 2(47)). It passed three ₹10 lakh orders, and the NCDRC upheld the Dial4Trade order [1].
• Self-declaration rejected: In the Snapdeal toys case, CCPA held that relying only on what sellers declare is inadequate [4].

Case for limited liability

• A pure marketplace may be unable to verify every seller's product details [5].
• Licensing explosives is PESO's job under the Explosives Act, 1884. IndiaMART's writ in the Delhi High Court challenges how far CCPA's powers reach [1].
• Heavy compliance burdens may disrupt lawful B2B industrial trade.

Why passive safe harbour falls short for security

• Scale: IndiaMART alone hosted 2,700 ammonium nitrate sellers [1].
• Delisting does not recover stock: Taking down a listing does not trace or seize explosives already sold or stored. Results depend on PESO acting on the seller data CCPA shared [2].
• Weak deterrence: Each order carries a flat ₹10 lakh fine. That is about ₹90,000 per seller for Dial4Trade but under ₹5,000 per seller for ExportersIndia [1].
• Reactive enforcement: CCPA acts case by case (acids, toys, now explosives), and each round needs a fresh investigation.

Way forward

• Know-your-seller and know-your-buyer: Platforms should check PESO licences against official records in real time, both before listing and before sale.
• Add a negative list of regulated goods (goods that cannot be listed without a verified licence) to the amended E-Commerce Rules, effective 1 January 2027 [6].
• Scale penalties to the number of listings, and require PESO to publish its follow-up action.

Marketplace liability in India is shifting from passive hosting to active gatekeeping. Safe harbour still suits ordinary goods, but for dual-use substances (goods with both lawful and destructive uses) platforms must earn it through verifiable due diligence. Writing licence-linked listing duties into the rules would protect ease of doing business and also the public's right to life under Article 21.