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Policy & Regulation
Friday, January 24, 2020
Data Policy Tweaks Set to Keep India Inc Busy in 2020

FORECAST 2020 Personal data protection bill and setting up of Data Protection Authority will be the key developments to watch out for the next year

As 2019 comes to an end with the introduction of the long-awaited Personal Data Protection Bill, India Inc awaits yet another year of hectic technology policymaking that will seek to regulate everything from personal and nonpersonal data, technology intermediaries, ecommerce companies, over-the-top platforms, cloud services and digital taxation.

Technology companies will have their hands full in 2020 with the implementation of the Personal Data Protection Bill, which has gone to a joint parliamentary committee for a thorough review.

“The Personal Data Protection Bill and the setting up of the Data Protection Authority (DPA) will be the key developments to watch out for the next year. Codes of practice set by the DPA will be critical for businesses and a lot of time will be spent on that,” said Nikhil Narendran, a partner at Trilegal.

The Bill, aimed at giving individuals more control over their data, has not proposed a timeline for the implementation of the rules. Government sources have stressed that since the Bill was based on the European Union’s General Data Protection Regulation, foreign technology companies may not need more than two years.

Heated debate is expected in the coming year on the most controversial provisions of the Bill, which are the right given to the central government to exempt itself from the obligations of the Bill, including seeking consent to collect and process personal data, powers be- VILHELM HAMMERSHOI Interior, Strandgade 30

stowed upon it to seek non-personal data from companies for the purposes of policymaking, and the verification of social media users.

“Hopefully we should see extensive consultation on the PDP Bill next year. It remains to be seen what the government does on wide exemptions granted to them in the Bill,” said Nehaa Chaudhari, director, public policy, at Ikigai Law. “There are many moving parts. Most issues that grappled policymakers and companies will remain alive in 2020.”

Experts said other technology policies on the governance of non-personal data, ecommerce companies, cybersecurity and cloud that are work in progress may also get finalised in the coming year. Many of these are in various stages of drafting and consultation. Also, India could probably see a lot more debate around regulatory overlaps among the Ministry of Electronics and IT, Ministry of Information and Broadcast and the Telecom Regulatory Authority of India.

“Now we are moving into the next stage to see how it will all pan out. In 2020, we will see the start of the implementation of what has been in the works,” said Ashish Aggarwal, a senior director and the head of public policy at the National Association of Software and Services Companies (Nasscom), which counts Indian IT companies as well as US technology firms such as Google and Facebook as members.

Another critical technology policy development expected in early 2020 is the finalisation of the proposed amendments to the Intermediaries Guidelines Rules, which originally provided a legal shield to technology platforms against the content shared on their platform. (Source: Economic Times)

Policy Muddle Ruins Year 2019 for Crypto, Blockchain Industry

But experts see better times ahead for the sector. The cryptocurrency and blockchain industry has had a not-so-great 2019 in India and elsewhere due to lack of favourable regulations and hostile central banks, but things may change in the coming years, say experts.

The year began with shutdowns of cryptocurrency exchanges and layoffs. But with global giants, including Facebook, entering the space and several countries examining the virtual currency and the blockchain technology behind it, and the industry itself looking at self-regulation, experts suggest Indian crypto startups stand to gain. “Governments across the globe are now examining blockchain and cryptocurrencies, including stable coins, as well as selfregulated and global regulatory standards, which indicate more widespread public adoption,” said Changpeng Zhao, CEO of cryptocurrency exchange Binance, which recently acquired local exchange WazirX to enter the Indian market.

“I think in 2020, we will see different experiments tried by many different governments around the globe for adoption. Some will work, some may not, but overall, they will have a tremendously positive effect for crypto adoption,” he added. Last week, the Reserve Bank of India reiterated its opposition to private digital currencies. A panel headed by former finance secretary Subash Chandra Garg had earlier this year recommended making cryptocurrency trading in India illegal. Nevertheless, the RBI has begun consultations with other central banks on India’s own digital currency.

China is reportedly set to launch its own digital currency by 2021. Countries such as France, Singapore and Malaysia are also testing similar virtual currencies.

Tanvi Ratna, the founder of policy and regulatory advisory firm Policy 4.0, said the launch of the Chinese sovereign coin would influence Indian regulatory strategies. “Too much has shifted in the global regulatory front, and that will already start impacting Indian startups, regardless of the Indian government’s decision. The blockchain world in 2020 is going to look a lot different from the last year or two,” Ratna said. However, startups working in the space in India are looking at shifting their offices to countries that offer favourable policies, said neo bank Juno’s cofounder Varun Deshpande. But despite the regulatory challenges, the startups are innovating in the space.

The interest in crypto trading and engineering new innovations in the space has only risen in India, said Ramani Ramachandran, the CEO of Singapore-based crypto firm ZPX.

“There are pronouncements of these kind (against private digital currencies) but on the ground level there are a bunch of companies coming up.”

While the government and RBI had shown concern against the proliferation of private digital currencies, their interest on the subject has been lukewarm, said Sathvik Vishwanathan, the CEO of cryptocurrency exchange Unocoin.

Vishwanathan said unless there were big moves by authorities across the world banning or allowing cryptocurrency trade, the matter was unlikely to be a part of the Indian government’s agenda.

The industry is, meanwhile, waiting for the Supreme Court’s decision in a case challenging the RBI’s ban on use of banking channels, and the ruling is expected to determine the direction of the cryptocurrency ecosystem in India. (Source: Economic Times)


Mobile Cos Seek Review of Duty on Parts as Imports from Vietnam Soar

Component imports from Vietnam, with which India has a free trade pact, have crossed $1b in H1

The scorching pace of imports of mobile phone components from Vietnam has set alarm bells ringing in the industry, prompting handset makers to ask the government not to impose any additional duties on components and to re-evaluate present duties.

India has imported mobile phone components worth more than $1 billion from Vietnam — with which India has a free trade agreement (FTA) —in the first half of this fiscal alone, compared to $800 million in the whole of 2018-19 and just over $600 million in FY18, an industry association of companies making handset in India has informed the government.

“The import numbers have started to look astounding,” India Cellular and Electronics Association (ICEA) said in a letter to the electronics and IT ministry. “In the face of this, we can ill-afford any further duty imposition and, in fact, need a rethink on whether some of the duties imposed should continue as they are,” it said, urging the government to tweak existing duties under its phased manufacturing programme (PMP) to boost local production and curtail imports.

“Not only should we not proceed with any additional duty imposition and simultaneously withdraw all unintended residual components of basic customs duty, we should re-evaluate all current PMP duties on all sub-assemblies and components by studying the Vietnam imports meticulously,” the association said.

It is futile to have a duty-led regime when zero-duty imports on the same products are permissible through Vietnam and other Asean countries, Korea and Japan, which is being exploited by several companies, it said.

Handset makers had three years ago suggested imposition of duties to thwart imports of electronic products, beginning from mobile phones to its components to help build local capacities to generate volumes and exports. The government consequently imposed basic customs duty of up to 15% on imports of more than half a dozen mobile phone components, including a 20% duty on fully made mobile phones.

While India has become a manufacturer and exporter of fully made mobile phones — Apple, Samsung, Xiaomi make and export 4G and 3G devices from India — it has not been able to establish an ecosystem of component makers.

“The import of substitution concept has run its course,” ICEA said. The National Policy on Electronics 2019 envisages manufacturing target of $190 billion and export target of $110 billion, putting the focus on making India a global manufacturing hub, the volumes of which will pull sub assembly and component industry in the natural course of events, it said.

When differential duty and PMP were conceptualised, Vietnam in particular and ASEAN countries were not considered, the association said. Rather, the focus was on becoming an option to China, for companies to build manufacturing facilities. Even when the issue of FTA and blatant infringement of value-added norms by ASEAN countries came into light, the government did not take adequate action, it said.

“This is extremely disheartening and has made the industry rethink their investment plans in India,” the association said, giving examples of Samsung which moved its television manufacturing facility to Vietnam after India imposed duty of 5% on open cell TV panel, making local manufacturing of LED TVs more expensive for the South Korean consumer electronics company. The duty was eventually revoked.

The association further cautioned that import of printed circuit board assembly (PCBA), which makes up 50% of the cost of making a smartphone, should be prevented and be dealt with an iron hand on the grounds that the import would be clear infringement of 35% value-added norms. (Source: Economic Times)

Govt to vet responses by Amazon, Flipkart on their India operations

Govt to vet responses by Amazon, Flipkart on their India operations. Decision on future action will be taken depending on whether the responses indicate violation of rules, say officials

E-commerce companies including Amazon and Flipkart have submitted their responses to the queries sent to them by the Department for Promotion of Industry and Internal Trade (DPIIT) on their operations in India, which are now being vetted by the government to see if existing rules might have been flouted, an official has said.

Queries on business details such as top sellers, pricing of goods by vendors, capital structure and inventory management system were posed to the e-commerce companies following complaints by brick-and-mortar retailers as well as online vendors alleging that these companies may be violating FDI rules.

“The DPIIT is in the process of going through the responses given by the companies to the queries. Future action will depend on the information received,” the official said.

The Confederation of Indian Traders (CAIT) has complained to the Centre about alleged violation of FDI rules by e-commerce majors and accused them of predatory pricing, deep discounting, controlling inventory and influencing prices. The DPIIT then sent questionnaires to the e-commerce companies asking them to disclose information such as the names of top five sellers on their platform and the price of goods sold by preferred vendors and support to sellers to examine if they had a connection with sellers which could lead to the companies influencing prices of the items sold on their platform. “It is too early for the DPIIT to comment on the information received as it is still being examined. If everything is in order we will let the matter be. If not, then it can be taken up with the appropriate authorities,” the official said. The CAIT, in a press statement on Friday, said that it had convened a meeting of its National Governing Council on November 10 to take stock of the current situation and finalise the strategy for a movement to be launched from November 13. (Source: The Hindu Businessline)

Department of Telecom directs circle heads to treat Airtel, Tata Teleservices as separate companies

Asks them to audit customer acquisition form of both companies separately. The telecom department has directed all circle heads to treat Bharti Airtel and Tata Teleservices as separate entities, as it is in process to challenge their merger in the Supreme Court, according to an official source.

The Department of Telecom (DoT) has also asked all its entities to deal customer acquisition process and all compliance related issues of both the companies as separate companies.

“The department has written to all telecom circles heads on November 6 that it has not yet taken on record the transfer or merger of the demerged undertakings of TTSL to Bharti Airtel and Bharti Hexacom and transfer or merger of the demerged undertakings of TTML to Bharti Airtel,” an official source said.

Bharti Airtel on July 1 announced that the consumer mobile business of Tata Teleservices Ltd (TTSL) has now become its part. “The DoT has written that it is in process of two separate special leave petitions before the Supreme Court,” the source said.

The department, in the communication to the circle heads, asked them to audit customer acquisition form of both companies separately and even the compliance related to subscriber base should be handled separately.

“DoT has directed circle heads that there should be segregation of CAF audit process of Airtel and Tata Teleservices such as submission of separate subscriber database, submission of separate sampled CAF’s, calculation of separate compliance percentage and issuance of separate demand notice for imposition of penalty of Airtel and Tata Teleservices,” the source said.

Bharti Airtel has been submitting Tata Teleservices subscriber base as part of its overall customer base July onwards. When contacted, Bharti Airtel spokesperson said both the parties have operationalised the merger following the telecom tribunal TDSAT’s (Telecom Disputes Settlement and Appellate Tribunal) order directing the DoT to take the merger on record and approval of the schemes of arrangement by the NCLT, Delhi and NCLT, Mumbai.

“The DoT was duly notified of the same. The Registrar of Companies has also taken the merger on record. Needless to say, Bharti Airtel adheres to the highest standards of corporate governance and compliance,” the Airtel spokesperson said. In June, Airtel recorded mobile subscriber base of 320 million and Tata Teleservices 10.7 million. In July, Airtel reported mobile subscriber base of 328.5 million which includes customer base of Tata Teleservices as well. (Source: The Hindu Businessline)

Resolution Professional to Chair RCom AGM Today

In what is probably the first for any major corporate, a resolution professional will chair and address the shareholders of the Anil Ambani-run bankrupt Reliance Communications at the annual meeting with shareholders here on Monday. Companies in the diversified group will be holding their annual general meetings (AGMs) in the financial capital.

On the venue front, there is a change from the past as the financially embattled group has chosen to hold the meetings in a city college instead of one of the biggest auditoriums in the city.

In his heydays, Anil's father Dhirubhai, widely credited for creating the equity cult, used to book cricket stadiums located to address the mammoth shareholder meets.

Post-division of the businesses, both Anil and Mukesh Ambani companies held their shareholder meets at the sprawling Birla Mathoshree auditorium in south Mumbai.

Starting at 10 am the AGMs of Reliance Capital, Reliance Infra, Reliance Power, Reliance Home Finance and finally Reliance Communication will be held at the audio of the KC College, where Anil Ambani was a student, officials said. (Source: Economic Times)

IT Fears Impact as US Moves on New H-1B Process

BIG WORRY Indian cos are concerned that the process would favour US tech firms over them. The US has moved a step closer to changing how the H-1B visa issuance process is carried out from next year that would impact Indian IT services firms.

Last week, the Office of Management and Budget said it has completed a review of a proposed regulation from the Department of Homeland Security (DHS) that would mandate employers to register without paying the H-1B visa fees of those employees who they intend to sponsor for H-1B visa permit. A lottery system would shortlist people for the work permit, following which the applications will be acccepted.

Indian companies are concerned that the process of issuing visas would be non-transparent and would favour US technology companies over them. ET reported on August 9, that Indian IT firms have seen higher rejections for their visa applications, as the Trump administration looks at hiring more locals.

The DHS body also did a review of increasing the visa fee, a move once finalised would come into effect by April 2020. The revised fees has not been announced yet.

Once the proposed H-1B registration rule is published in the next few days, US Citizen and Immigration Services (USCIS) will open it for public comment before being finalised. Poorvi Chothani, managing partner at the Mumbaibased immigration law firm Law-Quest, said that USCIS should solicit feedback from interested stakeholders before the electronic registration system is implemented to make sure they roll out a viable and sustainable system.

“It is important that USCIS confirms by mid-September, 2019 whether it intends to mandate use of the electronic registration for the H-1B CAP petitions that will be filed in April 2020 for FY 2021. This is important because a large number of companies begin their H-1B cap filing process as early as August, and no later than January, depending on the industry.” (Source: Economic Times)

Govt wants fair competition, will not encourage monopoly: Prasad to telecom CEOs

Telecom Minister who met the industry honchos also assured them of government’s full support on outstanding issues such as cut in levies and refunds.

The government on Saturday told the telecom industry that it wants fair competition in the sector and will not encourage monopoly, while asked companies to prioritise quality of service and ensure “robust involvement” in 5G as also five-trillion dollar economy blueprint.

Telecom Minister Ravi Shankar Prasad who met the industry honchos also assured them of government’s full support on outstanding issues such as cut in levies and refunds.

“I highlighted to them, the need for a robust involvement of the industry in 5G innovation, startups and creation of 5G products that can create India specific patents. I said that in the five trillion economy target, 25 per cent should be telecom’s contribution,” the minister said after meeting industry CEOs.

Prasad’s first interaction with the industry after he took charge of the telecom portfolio comes at a time when the sector is reeling under severe financial stress with cumulative debt of over ₹ 7 lakh crore. The meeting was attended by Bharti Airtel CEO Gopal Vittal, Vodafone Idea’s Balesh Sharma, Reliance Jio board member Mahendra Nahata and BSNL chairman P K Purwar.

Prasad said he has already taken up outstanding issues such as inputs tax credit and lowering of GST rate with the Finance Ministry and said that a proposal pertaining to reduction of universal service obligation (USO) levy is also under the telecom department’s consideration.

“I have asked companies to look at improving the quality of service. Also 43,000 villages are uncovered at present. I have told the industry to pool in their resources so that in one year, we can reach all the uncovered villages and they have agreed. The Department of Telecom (DoT) will provide all assistance,” Prasad said.

The minister also asked the companies to look at improving connectivity and digital ecosystem in religious sites like Kedarnath and Badrinath. The minister assured the industry of its support on the issue of installation of telecom towers. The industry flagged the issue of lapsed bank guarantees which they want returned and the ministry has asked the DoT to urgently look into the matter. “I have assured them three things...We want a fair competition. The government will not encourage any monopoly and will do its best for ease of doing business,” Prasad said.

The telecom sector is burdened with staggering debt levels and cut throat competition. Competition has only intensified since 2016, when Reliance Jio, owned by richest Indian Mukesh Ambani, stormed into the market and offered lifetime free calls and dirt cheap data. Jio’s offerings forced rivals to slash rates, affecting profit margins. Since the launch, rivals have either teamed up via merger, resorted to acquisitions or folded up. (Source: Hindu BusinessLine)


TV & Radio Companies Want Broadcast Policy to Protect Media Freedom

Broadcasters in a submission to the I&B ministry have also suggested that the sector should have a regulator of its own. The National Broadcast Policy that the information and broadcasting ministry is working on should safeguard media freedom, TV and radio companies have told the government. They have also suggested that the sector should have a regulator of its own, according to people with knowledge of the matter.

The I&B ministry has stepped up work on the policy, expected to be announced in the next few months, which will involve a review of all major rules, with a focus on increasing foreign direct investment (FDI) in the area.

Threats of legal action “with punitive damages under the laws of defamation lead to a chilling effect on the publication of free and independent news and put undue pressure on journalists,” the Indian Broadcasting Foundation (IBF) told the ministry in its submission, ET has learnt. The policy should ensure a safe environment for journalists and the news media industry, it has said.

The foundation has also asked for the defamation law to be “reworked” to protect news channels. Several journalists’ organisations have previously protested against the continued criminalisation of defamation in India, saying this was a holdover from the colonial era and needed reform. A ministry official told ET that views were being sought from broadcasters and that the policy will mainly aim to remove regulatory barriers and reduce the obstacles for “investments, innovation and consumer interest”. The ministry also plans to collect views from content aggregators, distribution platform operators, infrastructure providers, manufacturers of equipment installed at the consumer end and other related devices, the academic community, innovators and startups.

The broadcasters have told the ministry that news media regulations in India are not unified. Multiple regulatory bodies have led to issues over the enforceability of decisions, they have said. A single law with one dedicated regulatory body needs to be devised exclusively for the broadcasting sector.

Apart from the IBF, the News Broadcasters Association (NBA) and the Association of Radio Operators for India (AROI) have held meetings with government officials on the proposed policy in the past few days.

An IBF member confirmed consultations with ministry officials had commenced a few days ago.

“The freedom of the news channels serve the larger purpose of the right of the people to be informed of a broad spectrum of facts, views and opinions,” the IBF told the ministry, according one of the persons cited above. “The survival of Indian democracy owes a great deal to the freedom of our press. The National Broadcast Policy should provide protection to news channels and (their) journalists as an essential part of the freedom of speech and expression as guaranteed in Article 19 (1) (a) of the Constitution of India.”

The submission by private radio operators is said to be similar in nature. Allowing private FM channels to broadcast news is the top demand, said AROI secretary general Uday Chawla. They currently have to carry All India Radio bulletins either live or deferred by 30 minutes. “Though AIR gives us the news for free, many of us don't use it because the format is not exciting. We would want freedom to play news reports and also have self-regulation,” Chawla told ET.

The IBF wants a dedicated regulator.
“There is a need for the government to establish a distinct and separate regulator that is staffed by experienced industry professionals who understand the broadcasting sector,” an IBF member said. “The policy should provide for a Broadcast Services Regulatory Authority (BSRA) and a Broadcast Services Appellate Tribunal (BSAT) as a part of sectoral regulators.” Some of the other demands include implementation of transparent and timebound registration, licensing and approval process, a single-window clearance system to reduce timelines, as well as simplification and reduction of regulatory compliances.

The policy will also seek to revamp state-run Prasar Bharati to improve standards besides cracking down on digital piracy and ensuring protection of intellectual property and copyright, a top government official said. It will also deal with sharing of infrastructure across platforms and promoting the indigenous production of consumer hardware to promote Make in India. A review of existing FDI policies to attract investment as well as startups to establish manufacturing facilities has also been proposed by the government.

The government has also been asked to allow a self-regulation code for content production and distribution for video streaming by overthe-top (OTT) services. Broadcasters have also sought recognition for industry self-regulatory bodies such as News Broadcasting Standards Authority (NBSA). (Source: Economic Times)

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