Policy Pulse #12 | Regulating Digital India: Round 2
Policy Pulse #12 | Regulating Digital India: Round 2
In Focus: A new Digital India Act in the works
Right on the heels of the news of withdrawal of the Personal Data Protection Bill in Parliament by the Government, news has emerged that a new legislation, known as the Digital India Act, is expected to be tabled before the Winter Session of Parliament later this year.
The Digital India Act (DIA) is expected to be a comprehensive legislation that will replace the existing Information Technology Act, 2000 which is over two decades old and is viewed as obsolete in light of the rapid technological progress. It is expected to cover various focal points of digital regulation, such as data protection and privacy; social media; over-the-top (OTT) platforms; introduction of additional offences and so on. It is also rumoured that the DIA will include some baseline regulations for blockchain, cryptocurrencies, Web 3.0, metaverse, and 5G. Based on available reports, it is quite clear that the target group whom these regulations are aimed at (and will impact the most) is Big Tech - Google, Amazon, Facebook, Twitter, Netflix and the like.
On data protection, it has been reported that the Government of India is looking closely at the European Union’s Global Data Protection Regulation (GDPR) as a template for India’s own regulations. The Government is also mulling the possibility of asking big tech companies to share anonymised data with start-ups who could analyse and use it for their future products.
For OTT platforms, although the Government of India already has a self-regulatory structure in place, it has been reported that the DIA will bring OTT platforms under regulatory scrutiny in respect of their content. The law is likely to empower concerned authorities to direct platforms to pull down content that violates guidelines or spreads misinformation.
Social media is also in for a big regulatory overhaul. Amongst other regulations associated with data protection and monetisation, the DIA will reportedly empower the Government to block any Facebook page or Twitter handle temporarily for 24 hours if it is found to be disseminated misleading information or inciting violence.
Given the ambitious target that the Government has set for itself, it is fair to assume that the draft legislation has made significant progress. However, with the high level of secrecy surrounding this crucial task, it cannot be said for certain that India will have a new digital law by 2023.
Top Stories of the Week
Payment aggregators urge RBI to reconsider new guidelines
Payment aggregators are approaching the RBI via their industry body, Fintech Association for Consumer Empowerment (FACE), to secure a relaxation of new guidelines which have effectively rendered them obsolete in the digital lending industry. In most digital lending (and buy now pay later) arrangements, loans are first disbursed to a nodal account, from whereon payment aggregators route money to the customers account.
Under the new guidelines, the role of credit intermediaries has been completely eliminated. All lending transactions are required to be only executed between the bank accounts of the borrower and RBI regulated entities without any pass through of any third party. Any processing fees, charges, etc. previously payable to intermediaries will now have to be borne by the digital lender and not the borrower. In addition, the lenders will also be required to disclose an all inclusive cost of the digital loan in the form of an Annual Percentage Rate (APR) up front.
While formulated in the interest of consumer protection, these guidelines will slow the growth of the digital lending industry in the short run. According to FACE, fintech lending companies disbursed a total of 2.66 crore loans worth Rs. 18,000 crores in FY 2021-22.
India inaugurates its embassy in Asuncion, Paraguay
India’s External Affairs Minister Dr. S. Jaishankar is currently on a tour of three major Latin America countries, Brazil, Argentina and Paraguay. This is the EAM’s first official visit to South America, aimed at boosting overall bilateral ties.
As the first visit by an Indian External Affairs Minister to Paraguay, the visit, which marked 60 years of diplomatic relations between New Delhi and Asunción, was of great significance. The visit saw Dr. Jaishankar inaugurate India’s newest embassy in the Latin American country. Until now, the Indian Embassy in Argentina's capital Buenos Aires was handling political relations with Paraguay.
Speaking on the occasion, Jaishankar expressed certainty that with the opening of the embassy, opportunities for cooperation between the two countries would increase. The opening of the embassy is line with the MEA’s project of increasing its global footprint, under which an embassy was opened in Estonia last year and approval to open an Embassy in Lithuania has also been recently granted.
CCI turns its attention to PE board seats in rival firms
The Competition Commission of India is reportedly keeping a watch on private equity firms that hold board positions in competing firms. While the regulator does not take issue with PE firms holding minority stakes in competitors, it is directing them to limit board representation to a single firm, citing competition concerns. Notably, the CCI has been studying ownership of PE investors since December 2020, and its new approach seems to be the culmination of this project.
This is not the first time that the issue has received attention from regulators. The European Commission dug into the phenomenon in 2020, finding it challenging to detangle the complex pattern of holdings and flagging it as an area of future research.
The move measures a wider discomfort around competition concerns that can arise in an ecosystem from the influence of third parties. The Competition (Amendment) Act, 2022, recently introduced in the Lok Sabha, also introduces the idea of ‘hub and spoke cartels’ - where collusion between competitors is facilitated by a third party - to Indian antitrust law.
This Week in Policy
Macroeconomics and Taxation
The Centre is considering phasing out the old income tax regime, which permitted exemptions, while incentivising people to switch to the new exemption-free regime.
The RBI has notified the Foreign Exchange Management (Overseas Investment) Rules, 2022 (available here), intending to simplify the framework around overseas investment by Indian entities.
RBI is considering using robust statistical data and machine learning to strengthen real-time data tracking.
As per data from the Ministry of Statistics and Program Implementation, 19 states have crossed pre-COVID GSDP levels in the year 2021-22. 7 saw double digit growth in the year.
Labour
Uttar Pradesh is considering combining all eight of its state labour laws into one or two state labour codes.
Agriculture and FMCG
Directorate of Agriculture, Jharkhand to use blockchain technology to distribute seeds to farmers in the state
Cabinet approves restoration of interest subvention support on short term agricultural loans. Approves additional budgetary provision of Rs. 34,856 crore from 2022-23 ro 2024-25.
Healthcare
Persons vaccinated for COVID-19 abroad are now eligible to receive the remaining doses in India.
Doctors flag the emergence of a new non-life threatening illness, ‘tomato flu’, affecting children under the age of 5. The disease reportedly has symptoms similar to those of chikungunya.
Transgender persons to be receive an inclusive and composite healthcare package pursuant to an MoU between the National Health Authority and the Department of Social Justice and Empowerment.
Foreign affairs
A joint delegation from India and UAE visited Tanzania to have discussions with senior government officials, to identify third country projects in the healthcare sector that can be launched, in collaboration with government and private healthcare providers
Vikram K. Doraiswami, currently serving as the Indian High Commissioner to Bangladesh has been appointed as the new Indian High Commissioner to the United Kingdom
During a state outreach programme held in Hyderabad, Dr. Ausaf Sayeed, Secretary (CPV & OIA) confirmed that India will start issuing E-Passports by the end of 2022 and will be at the forefront in cloud passports
Technology, Media and Telecommunications
Online gaming task force is likely to set spending limits for individual players in games in its regulatory framework
India Blockchain Forum has been launched with a vision to make India a hub for blockchain technology and Web 3.0.
International trade and commerce
Senior officials of the US Trade Representative (USTR) are visiting India this week to advance talks for the bilateral Trade Policy Forum
In the June quarter of FY23, India slashed crude oil imports from US by 1 million metric tonnes. US’s share in India’s total crude oil imports went down from 9.2% in FY22 to 5.4% in the first quarter of FY23, where overall share for Russian imports went up from 2.2% to 12.9%
Banking, Finance and Insurance
Finance Ministry states government not considering levying charges for transactions done via UPI
SEBI imposes prudential limits on investments by portfolio managers in their own associates or related parties
Manufacturing
The Government has begun discussions to formulate a PLI Scheme for incentivising the manufacture of toys, lab-made gems and bicycles.
Apple Inc plans to manufacture the new iPhone 14 in India about 2 months after the product’s initial release out of China and is working with suppliers to address lag issues.
The Government intends to roll out a PLI Scheme for niche advanced chemistry cells. Uniquely, beyond production, the scheme shall also contain incentives for research and development.
The Government is looking to modify the FAME-II scheme to fix certain loopholes, and lay greater emphasis on domestic value addition.
Retail and e-commerce
Ecom Express, one of India’s leading tech logistics company, has announced integration with the Open Network for Digital Commerce (ONDC) for providing end-to-end logistics services to small sellers and retailers on the ONDC network.
ONDC has signed a Memorandum of Understanding (MoU) with the Jammu and Kashmir Trade Promotion Organisation (JKTPO) to promote the adoption of e-commerce in the Union Territory of Jammu and Kashmir.
Logistics
National Highways Logistics Management Limited (NHLML), Inland Waterways Authority of India (IWAI), and Rail Vikas Nigam Limited (RVNL) will collaborate under a tripartite agreement between the road, shipping, and railways ministries to develop Multi Modal Logistics Parks
According to the Infrastructure and Monitoring Division, 14 centrally funded projects in Assam are facing time and cost overruns, including the construction of several railway lines, widening of roads and construction of a new integrated terminal at the LGBI Airport, Guwahati.
Sustainability
Asian Development Bank and India signed a $96.3 million loan to provide safe drinking water and improve water supply and sanitation services in Himachal Pradesh.
Ladakh released the Electric Vehicle and Allied Infrastructure 2022 policy with subsidies to incentivise buyers and make the Union Territory a leader in EV adoption.
Delhi released its Charging/Swapping Infrastructure Action Plan up till 2025.
Draft UP Solar Policy released - proposes to install 16 GW of solar capacity in the state over a period of five years.
Upcoming Events
Health System Dialogues - Strengthening Primary Healthcare
August 25 | Virtual
Centre for Social and Economic Progress (CSEP) is organising a webinar on Strengthening Primary Healthcare, as part of their Health System Dialogues series on August 25, 2022 from 6-7:30 PM. The importance of primary healthcare systems cannot be overstated, and this discussion aims to be a cross country sharing and distillation of insights on the same. The Chair for the discussion will be Dr. V.K. Paul, Member, Health, NITI Aayog. Read more | Registration Link
Securing Our Digital Future
August 31 | Taj Mahal Hotel, New Delhi
Observer Research Foundation (ORF) is organising a discussion on Securing Our Digital Future on August 31, 2022 at Diwan-i-Am, Taj Mahal Hotel, Mansingh Road. The event will cover topics such as increased collaboration among nation states to thwart cyber threats and contributions of the tech sector to secure critical infrastructure information, among others. Ashok Malik, Policy Advisor, Ministry of External Affairs will be in conversation with Brad Smith, President and Vice Chair, Microsoft before the discussion opens up to the audience. Read more
Opportunities for Green Hydrogen in India
August 30-31 | Virtual
As part of the International Climate Summit, 2022, the PHD Chamber of Commerce is organising a hybrid event on exploring Opportunities for Green Hydrogen in India from August 30-31. Key focus areas for the summit will include identifying the incentives required for setting up mega scale hydrogen plants in India for industrial and domestic consumption and export and providing a pathway for sustainable energy security coupled with direction on developing road map for achieving net zero target of India. Read more | Registration Link
A Few Good Reads
CEA V. Ananth Nageswaran and Deeksha Supyaal Bisht question the narrative of a distressed rural economy.
Read this insightful article by Pranay Kotasthane about the structural changes in China’s economy and the opportunities that these transitions present for India.
Tim Requarth highlights the challenges in fighting medical misinformation.
Akshaya Jose Devasia broaches the possibility of a 'feminist foreign policy' for India, as women see increasing representation in leadership and diplomatic roles.
Niranjan Rajadhyaksha presents a fantastic economic history of India.
Tweets of the Week
Pawan Kumar Rai of Finshots details India’s bumper savings in foreign exchange, by replacing oil with ethanol (and attacking stubble burning on the side):
The Indian military band plays ‘Jai Ho’ at the SCO Military Bands Festival:
On a lighter note:
Key Notifications
The Government notifies overseas investment rules and regulations, introduces stricter valuation rules for overseas direct investments. The notifications can be found here, and here.
The Battery Waste Management Rules, 2022 have been released by MoEFCC to ensure environmentally sound management of waste batteries.
The Government allows retrofitment of CNG and LPG kits in BS-VI compliant gasoline vehicles and replacement of diesel engines with CNG/LPG engines in case of BS-VI vehicles.