Convergence Plus
Policy & Regulation
Monday, March 30, 2020
Coronavirus: Nasscom seeks easing of Work From Home norms as Covid-19 cases surge

Pre-Bookings open for Samsung Galaxy S20, S20+, and S20 UltraAs the number of Covid-19 cases in India surges, the IT industry’s apex body Nasscom has sought easing of regulatory restrictions for a month to enable Work From Home (WFH) for the sector. Under the prevailing other service providers (OSP) regime, IT and ITeS firms require multiple levels of compliance -- ranging from technical to high-security deposits -- for WFH. This the main impediment before the WFH culture in the country.

The Covid-19 outbreak in India has forced the industry to look at ensuring business continuity. Industry players have also echoed a similar sentiment and believe that there must be cognisance in providing WFH to employees under the OSP regime, Nasscom said in a letter to Telecom Minister Ravi Shankar Prasad.

Indian IT-ITeS companies are evaluating several options to ensure business remains up and running and one such option is to offer WFH to their employees to minimise any threat to people and business. Today, it is possible for employees to work from anywhere in the world, while remaining within the ambit of organisational information and data access protocols, and organisational security practices, the letter written by Nasscom President Debjani Ghosh said.

Accordingly, keeping in mind the current situation and in the interest of public health and the safety of people employed in the technology industry, Nasscom has sought urgent intervention to waive requirements pertaining to WFH under the OSP regime for one month, as an “interim emergency measure”. The move is important as despite the availability of technology, companies under the OSP regime continue to struggle in operationalising WFH for their employees due to the “onerous” compliance and technical requirements under the prevailing regime. These include setting up Provider Provisioned Virtual Private Networks (PPVPN) connectivity, sharing pre-defined locations of extended agents (employees) and providing “high” monetary security deposits among others.

Last year, licensor Telecom Regulatory Authority of India (TRAI) had conducted extensive consultation on an other service providers regime and recommended the need to remove restrictions. However, DoT is yet to take these into consideration, it said.

“At a time when the world is looking for the cure of Covid-19, it is essential for technology companies to be able to support global efforts by ensuring adequate uptime, and thereby support initiatives that have the potential for saving thousands of lives around the world,” the letter added. (Source: The Hindu Businessline)

Wi-Fi on Flights Allowed, Govt Notifies New Rules

Airtel, Vodafone Idea, Tata Tele likely to pay AGR dues on Monday: DoT source Pilot-in-command may permit access; gadget to be used in flight mode. Wi-Fi on flights will now be allowed in India for internet services upon permission from the pilotin-command and the gadget is to be used in flight mode, with the government finally notifying rules for this.

The amended aircraft rules have been published by the government in the official gazette on Saturday and they skip the mention of allowing mobile communication, which was mentioned in the draft rules published by the government on August 14 last year.

“The pilot-in-command may permit the access of internet services by passengers on board an aircraft through Wi-Fi on board when laptop, smartphone, tablet, smartwatch, e-reader or a point of sale device is used in flight mode or airplane mode. Provided that the director general shall certify the aircraft for usage of internet in flight through Wi-Fi on board subject to procedures as specified in this behalf,” the latest notification now says. ET has a copy of the notification.

The final rules notified on Saturday say the pilot-incommand may permit the use of cellular telephones by passengers of a flight “after the aircraft has landed and cleared active runway, except when the landing takes place in low visibility conditions as may be determined by the director general.” An additional explanation has been added in the new rules saying an aircraft shall be deemed to be in flight when all its external doors are closed following embarkation until the moment when any such door is opened for disembarkation.

The government in its latest notification has also said that it received no objections or suggestions from the public in respect of the draft rules.(Source: The Economic Times)

AIRWAVES AUCTION MAY GENERATE ₹35,000-40,000 CR

Spectrum Sale may Fetch only ₹10kcr Initial Payment. Voda Idea, Bharti Airtel may give 5G spectrum a miss at current price but Jio may buy some

The government may generate upfront payments of only around ₹10,000 crore from spectrum auctions in the next fiscal year starting April 1, given the financial challenges faced by two major telcos Vodafone Idea and Bharti Airtel, telecom department officials have estimated.

This implies that the next spectrum sale could fetch it only around ₹35,000-40,000 crore overall as against the ₹5.86 lakh crore worth of airwaves that the government wants to put on sale at base price, experts said.

Telcos pay upfront 25% for the sub-1 GHz band and 50% for higher bands they win in auctions. The balance is paid over 16 years in equal instalments.

Senior officials told ET that loss-making mobile phone operators Vodafone Idea and Bharti Airtel — facing a combined ₹89,000 crore in new statutory dues — are expected to give the 5G spectrum a miss in the upcoming sale planned in March-April.

Airtel, though, is likely to pick up some 4G airwaves, especially in eight circles where its permits are expiring.

“Of the three players, Jio may take some 5G spectrum but not much, besides some 4G. We expect it will do so to get the firstmover advantage,” said a government official, who did not want to be named.

Loss-making Vodafone Idea, facing a survival threat and in the midst of a costly integration process, is expected to largely give the auctions a miss, officials said.

Spectrum Renewal Hopes

This means without the adjusted gross revenue dues, the government will fall way short of its ₹1.33 lakh crore budgeted for the next fiscal year, with only ₹20,000-25,000 crore expected to come from licence fees and spectrum usage charge.

Airwaves across the 4G bands of 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2100 MHz, 2300 MHz and 2500 MHz, besides 5G spectrum in the 3300-3600 MHz bands, will be offered to Vodafone Idea, Bharti Airtel and Reliance Jio.

The auction, expected in the first quarter of the next fiscal year, will see some 8,293.95 MHz of airwaves at an estimated total base price of ₹5.86 lakh crore.

These numbers, however, look very optimistic.

‘UNREALISTIC PRICING’

“The government planning an auction is commendable, however, given the reserved prices for the most sought-after bands and the present financial condition of the industry, we do not believe the government will be able to garner any more than ₹6,000-7,000 crore as upfront payment,” said Rajan Mathews, director-general of the Cellular Operators Association of India (COAI), which represents all private telcos.

“This is not to negate the fact that there are tremendous opportunities in India, but what is getting in the way is the unrealistic pricing of the key spectrum bands that are for 5G, and the 700 MHz band,” Mathews added.

The government had cleared a base price for 5G airwaves at ₹492 crore per MHz and proposed the sale of a minimum 20 MHz blocks, which would mean a telco would have to spend close to ₹50,000 crore for 100 MHz — the quantum it needs to offer quality 5G services. For the 700 MHz band, which was unsold at the previous auction, the DoT has cut the base price by 43% to ₹6,568 crore a unit, or ₹32,840 crore for a block of 5 MHz.

Telcos have described the rates as expensive.

Earlier this week, Bharti Airtel CEO Gopal Vittal reiterated in an earnings call that the 5G airwaves were priced too high. “…we will not pick it up at those prices”, he said.

Previously, Vodafone Idea and Reliance Jio had termed the 5G base prices as too expensive.

“At the stage that we are in and where there is tremendous pressure based on their financial health, the upcoming auctions are expected to be muted,” said Prashant Singhal, global technology, media and telecommunications (emerging markets) leader at EY.

SPECTRUM RENEWAL

All hopes are pinned on spectrum renewal.

“The best case for the government is to realise value from spectrum renewals from the incumbents, and this may help the government raise ₹25,000 crore at most, of which Rs 10,000 crore may accrue in FY21. Over and above this has to be 5G spectrum auction, which seems very unlikely given the ecosystem and spectrum pricing,” said Rajiv Sharma, head of research at SBICap Securities.

If there is a 50% reduction in current 5G prices, then there may be some interest for 3,500 MHz and another ₹20,000 crore could be raised in the fiscal year starting April 1, 2021, he said.

“So, to sum up, spectrum auction is not going to be more than ₹35,000 crore,” Sharma said.

Already weighed down by debt of over ₹7 lakh crore, loss-making telcos Bharti Airtel and Vodafone Idea are now facing over ₹35,000 crore and ₹53,000 crore, respectively, in adjusted gross revenue dues after a Supreme Court order last October.

Both have filed a plea in the top court to be allowed to negotiate with the DoT on longer timelines and modalities for payment, in a bid to soften the financial blow. The court has yet to hear the matter. (Source: Economic Times)

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)

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