The Aakhya Weekly #29 | Game on!
In Focus: MeitY sets rules for online gaming
The Ministry of Electronics and Information Technology (MeitY) has put out draft amendments to the IT intermediary rules of 2021 for public consultations. The amendments, which pertain to online gaming and cover gaming platforms, intermediaries and players, are expected to be a big part of the Government of India’s goal of a 1-trillion digital economy by FY2025-26. Online gaming associations like the All-India Gaming Federation have lauded this move as a great first step for comprehensive online gaming regulations and as an effective means to combat the issue of illegal offshore gambling.
Some of the key features are know-your-customer (KYC) norms for all gamers, age verification (18 and above), and a three-tier self-regulatory mechanism along similar lines as those applicable to OTT platforms. For the uninitiated, the three-tiered self-regulatory mechanism comprises a platform level (tier I), a self-regulatory body composed of gaming platforms, domain experts and other qualified individuals (tier II) and a governmental oversight committee (tier III).
While this is undoubtedly good progress, there are a few questions that need addressing. Firstly, the KYC norms have been made applicable to all players – a bit of an overkill, so to speak. Presumably, KYC has been introduced to ensure the age limit is followed for adult-themed games with violence and/or sexually explicit content and for games where players make payment deposits in the hope of earning winnings, like in fantasy sports. However, this requirement does not consider gamers who want to play casually without depositing money, or for players who want to play games in practice or training mode – not to mention the added compliance burden for processing players’ personal data.
Secondly, the issue is likely to create discord between the Centre and the States. While the Parliament has legislative power over all things internet, betting and gambling is a subject under the State list. The Law Commission in its 276th Report has indicated that while betting and gambling fall exclusively within the domain of the States, online gaming (due to use of internet) is a matter for Parliament to legislate on. Regardless, many States like Nagaland and Sikkim, who already have laws in place for online gaming, are expected to push back against this amendment. A petition by the States of Tamil Nadu and Karnataka on this issue is still pending before the Supreme Court of India.
Lastly, while the draft amendment prohibits wagering on games, it does not distinguish between games of chance and games of skill. While a good understanding of the distinction that can be discerned from various Supreme Court and High Court decisions on the subject, clarity in the regulatory text might help to further remove ambiguity.
Tracking the G20
In this week’s coverage of the G20, steel Secretary, Ajay Khanna, hinted that India will use the G20 presidency to present a roadmap for roadmap for boosting financial inclusion. In this opinion at The Economic Times, he says “the country will strive to advocate the importance of digital public infrastructure (digital identity, digital payment and digital consent-based sharing of data) to deepen the financial inclusion ecosystem globally. Digital innovations can address traditional barriers to inclusion through reduction of transaction costs and information asymmetry, especially in the case of disadvantaged groups such as MSMEs and small and marginal farmers.”
As global power dynamics shift with the Russia-Ukraine war, C Raja Mohan, in the The Indian Express, writes about the nature of changes and the challenges they pose for India. He suggests that “it is unlikely the world will return to the kind of multilateralism we got used to since the 1990s. India’s G20 leadership would be a success if it can prevent the complete breakdown of the multilateral system and generate major power consensus on a few issues. Meanwhile, new rules for the global order are beginning to emerge from like-minded groupings like the G7 rather than a deeply divided G20.”
In a more operational development in preparation for the meet in the national capital, the Municipal Corporation of Delhi on Wednesday ordered that no road-digging permissions will be granted from May 1st to September 15th this year.
Top Stories of the Week
SEBI Gives the Final Nod for Social Stock Exchange
In December 2022, the Securities Exchange Board of India (SEBI) granted its final approval for introducing the Social Stock Exchange (SSE) as a separate segment on the National Stock Exchange of India and the Bombay Stock Exchange. In the past, The Securities Contracts (Regulation) Act of 1956 was invoked to enable fundraising for not-for-profit organisations through a “zero coupon zero principal” mechanism. Stock exchange of this kind is intended to benefit the private and non-profit sectors by directing more capital to them with a special focus on providing a unified funding channel to listed social enterprises that are at the bottom of the socio-economic pyramid. The SSE will function as a distinct division of the current stock exchanges under the new regulations. The framework was created based on the suggestions of a working group and technical group that the regulator formed. Currently, the regulations allow a minimum issue size of Rs 1 crore and a minimum application size for subscriptions at Rs 2 lakh. Subscription to this instrument would be like a philanthropic donation. The concept gained momentum, particularly in India during the pandemic, as the need for social capital for enterprises and voluntary organisations became essential. Countries like Brazil, Portugal, South Africa, the UK, Canada, and Singapore already have established Social Stock Exchanges.
Supreme Court upholds the legality of demonetisation
A five judge bench of the Supreme Court upheld the Government’s 2016 decision to demonetise currency notes of the denominations of Rs. 500 and Rs. 1000, by a 4:1 majority. To the majority, the matter hinged on whether such an exercise was permissible under the Reserve Bank of India Act, 1934, and whether the decision-making process underlying the measure satisfied the requirements of the Act. Justice Gavai, writing for the majority, held that RBI was competent to take such a measure, and that its decision-making process was sufficient. On the advisability of the decision, however, the court held that questions of economic policy were beyond its competence.
Justice Nagarathna, on the other hand, took the view that appropriate procedure was not followed in taking the measure. She found that the decision was unlawful, as the decision was not initiated by the RBI, as was envisaged under the scheme of the Act, but by the Central Government. To do so lawfully, the Parliament would have to pass a legislation to this effect. Further, she found that the Act only permitted the demonetisation of specific series of bank notes, and a wholesale demonetisation would be manifestly arbitrary. Opining so, however, she held that her observations would not vitiate any measures taken in the past.
This Week in Policy
Economy and Taxation
India’s services and manufacturing sectors both showed signs of exuberance in December. The country’s services PMI rose to 59.4 in December, compared to 56.7 in the preceding month, while its manufacturing PMI rose to 58.5, from 56.4 in the previous month. Any score above 50 indicates that the sector indicates growth.
India has taken four loans worth $1.2 billion from the Asian Development Bank for various development projects. These include a $220 million loan to strengthen Tripura’s power sector, a $300 million loan to improve road connectivity in Assam, a $350 million loan to expand Chennai’s metro rail network and a $350 million loan to upgrade road connectivity to Maharashtra’s key economic areas.
Labour
India’s unemployment rate has hit a 16-month high of 8.30%, according to data from the CMIE. Encouragingly, however, this was partly due to a 12-month high in India’s labour force participation rate, with more Indians being employed than any month since January 2022.
Agriculture and FMCG
India's agricultural and processed food products exports rose by 16% in the first eight months (April-November) of the current financial year 2022-23 on a yearly basis. For the year 2022-23, an export target of $23.56 billion has been fixed for the agricultural and processed food products basket.
Healthcare
Passengers arriving from six countries - China, Japan, South Korea, Hong Kong, Thailand and Singapore - will mandatorily have to submit negative RT-PCR test reports, according to new COVID-19 travel guidelines released by the Health Ministry.
The Government has achieved its target of setting up 1.5 lakh Ayushman Bharat Health and Wellness Centres, Health Minister Sh. Mansukh Mandaviya said.
Foreign affairs
Microsoft Chairman and CEO Satya Nadella called on Minister of External Affairs S. Jaishankar in New Delhi this week.
Technology, Media and Telecommunications
The All-India Digital Cable Federation has moved the High Court of Kerala against the TRAI’s tariff amendment order (NTO 3.0).
The Government of India is launching a crypto-awareness campaign to educate users about the legality of cryptocurrencies and the risks associated with investing.
International trade and commerce
The India-Australia Economic Cooperation and Free Trade Agreement (ECFTA) came into effect on 29 December 2022.
Trade settlement in rupees, which has stamp of approval from RBI and the Government, finds many takers abroad
Banking, Finance and Insurance
SEBI sets up working group to develop a fresh framework to allow mutual fund participation in credit default swaps (CDS), a move part of a series of actions planned by the regulator to develop the corporate bond market.
Manufacturing
India and France initiate dialogue towards strengthening a key partnership in the “Make in India” campaign in manufacturing aircraft engines and long range submarines.
The government sets March 2025 as the deadline for mobile device companies in India to use USB Type-C as the standard charging port in their products.
Logistics and Infrastructure
Ministry of Ports, Shipping and Waterways (MoPSW) has a pipeline of 44 projects for total investment of ₹22,900 crore till 2024-25 and is working on the guidelines for dealing with stressed public-private partnership (PPP) projects at major port.
On 3rd January 2023, Defence Minister Rajnath Singh inaugurated 28 infrastructure projects worth Rs 724 crore. Out of these projects, eight have been constructed in Ladakh, four in Jammu and Kashmir, five in Arunachal Pradesh, two in Rajasthan and three in Sikkim, Punjab and Uttarakhand.
Sustainability
Union Cabinet approved an initial budget outlay for National Green Hydrogen Mission amounting to Rs.19,744 crore, with the bulk of funding earmarked for strategic interventions in the sector. The mission aims to generate manufacturing capacity of 5MMT of Green Hydrogen and Green Ammonia annually by 2030, which will require approximately 125 GW of renewable energy capacity.
Delhi government approves draft Solar Policy 2022. The new policy revises the state’s solar target by three times to 6,000 MW by 2025, representing an increase in share of solar energy in Delhi's annual electricity demand from 9% to 25% in three years. The policy also includes first-of-kind provisions such as community choice aggregation in India.
Ministry of Railways rolls out energy efficiency plan to meet 2030 net-zero target. The policy is broadly centred around five action points — sustainable buildings, cloud-based data monitoring and management portal, energy efficiency in equipment and appliances, power quality and restoration, and capacity building and awareness.
Tamil Nadu sets up ₹1,000-crore Green Climate Fund. As the first dedicated governmental climate fund in India, it will support various climate change initiatives, mitigation and greening projects in the state. The fund will be managed by Tamil Nadu Infrastructure Fund Management Corporation and will have a greenshoe option for another ₹1,000-crore.
Upcoming Events
Madhya Pradesh Global Investors Summit 2023
January 11-12 | Brilliant Convention Centre, Indore
Madhya Pradesh is hosting the 7th edition of the Invest Madhya Pradesh – Global Investors Summit on January 11th and 12th, 2023 at the Brilliant Convention Centre, Indore. The two-day event aims to showcase the investment climate and industrial infrastructure in Madhya Pradesh and offers opportunities for prospective collaborations. This event will be a platform where global leaders, industrialists and experts come together to share their narratives on emerging markets/trends and ways to harness investment potential of Madhya Pradesh. More Information | Registration Link
India-Japan Environment Week
January 12-13 | Hotel Imperial, New Delhi
TERI and the Japan Chamber of Commerce and Industry in India (JCCII), along with Ministry of Environment, Forest and Climate Change (MoEFCC), GoI, and Ministry of the Environment, Government of Japan are organising an event on “Building a Resilient Decarbonized Society in India through Environmental Infrastructure and Technology" as part of the India-Japan Environment Week on January 12th and 13th, 2023 at The Imperial in New Delhi. Akihiro Nishimura, Minister of the Environment, Japan (MOEJ), and Bhupender Yadav, Minister, MoEFCC will be present at the event. More Information | Registration Link
Democratizing e-commerce for MSMEs and Traders
January 17 | PHD House, New Delhi
PHD Chamber of Commerce is hosting an interactive session with Thampy Koshi, MD and CEO, Open Network for Digital Commerce (ONDC) on "Democratizing e-commerce for MSMEs and Traders" on January 17th at PHD House. ONDC is a network based on open protocol and will enable local commerce across segments, such as mobility, grocery, food order and delivery, hotel booking and travel, among others, to be discovered and engaged by any network-enabled application. Registration Link
A Few Good Reads
Jairus Banaji writes a compelling history of India’s big business houses. A must-read.
Shruti Rajagopalan traces the history of India’s telecom sector through scenes from Bollywood movies.
A slew of reforms has set the ball rolling for a transformation of India’s economic trajectory, writes Ridham Desai.
Anushka Das Sharma reflects on the challenges and opportunities of India’s G20 presidency.
2021-22 marked a shift in India’s banking sector, with more private sector bank employees than public sector ones. Rohan Kishore digs into the data.
Tweets of the Week
Balaji Srinivasan notes India’s massive strides in developing infrastructure over the last decade:
Tanvi Madan highlights US-India defence cooperation activities over the last year:
As 2022 comes to a close, three statistics-related recommendations by Pramit Bhattacharya:
Key Notifications
MeiTY issues draft amendments to the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 in relation to online gaming. Stakeholders can submit feedback here by 17th January, 2023.