[September 16-23] CCG’s Week in Review: Curated News in Information Law and Policy

Cybersecurity experts warned of a new ‘SIM jacking’ threat, the Kerala High Court recognizes a right to access internet as the internet shutdown in Kashmir entered its 50th day; more updates on the linkage of Aadhaar with voter IDs and social media as the Indian Army braces itself to adopt AI – presenting this week’s most important developments in law, tech and national security.

Aadhaar

  • [Sep 16] Here are the amendments the Election Commission wants to the Representation of the People Act for Aadhaar-Voter ID linkage, Medianama report.
  • [Sep 18] Why Maj. Gen. Vombatkere has challenged Aadhaar Amendment Act in the Supreme Court; On WhatsApp and traceability, Medianama report.
  • [Sep 19] Drop in Aadhaar enrolments in J&K, The Economic Times report.
  • [Sep 20] In-principle decision to link Aadhaar with GST registration, The Economic Times report.
  • [Sep 23] Aadhaar card is now mandatory for nominees of your EPF account, Livemint report.

Digital India

  • [Sep 18] Indo-US ICT working group to meet on Sept 30, Oct 1, Medianama report.
  • [Sep 17] NITI Aayog frames guidelines for automated inspection of vehicles, ET Auto report.
  • [Sep 17] What TikTok told MEITY about its intermediary status, data collection, and policies for children, Medianama report.
  • [Sep 18] Soon, lands will have Aadhaar-like unique numbers, The Economic Times report; Business Today report.
  • [Sep 18] Drones to be used to digitally map India: report, Medianama report.
  • [Sep 18] PMO panel to release policy to boost handset manufacturing in India: report, Medianama report.
  • [Sep 19] Karnataka to set up exclusive body to boost innovation, The Hindu report.
  • [Sep 20] ‘Right To Access Internet Is Part Of Right To Privacy And Right To Education’: Kerala HC, Live Law report; Hindu report; NDTV report.

Data Protection and Privacy

  • [Sep 15] Privacy debate between govt, Facebook continues; no winner yet, Money Control report.
  • [Sep 16] Singapore, Philippines sign MoU on personal data protection, The Manila Times report.
  • [Sep 16] Industry wants careful drafting of regulations on non-personal data, The Economic Times report.
  • [Sep 16] Here are the top three reasons why data protection is required in every business, Firstpost report.
  • [Sep 20] Sensitive, super-sensitive data must be stored locally in india: RS PRasad, Business Standard report.
  • [Sep 20] Yet another data leak in Indian government database, exoposes multiple citizen IDs, Inc42 report.
  • [Sep 22] Infosys co-founder Kris Gopalakrishnan to lead panel on protection of non-personal data, Financial Express report.

E-Commerce

  • [Sep 16] Odisha government makes e-marketplace mandatory for procurements, The New Indian Express report.
  • [Sep 16] US antitrust officials investigate Amazon’s marketplace practices, Medianama report.
  • [Sep 17] Ministry of COnsumer Affairs extends deadline for comments on draft E-Commerce Guidelines 2019 to October 31, Medianama report.

FinTech and Digital Payments

  • [Sep 16] WhatsApp to roll out its payment services by end of this year: report, Medianama report; The Economic Times report.
  • [Sep 18] RBI proposes norms to regulate payment gateways and payment aggregators, Entrackr report.
  • [Sep 19] Regulatory shock for fintech firms: RBI blocks unregulated access to consumer credit history, Entrackr report.
  • [Sep 19] DSCI, MeitY and Google India join hands for ‘Digital Payment Abhiyan’, The Economic Times report.

Cryptocurrencies

  • [Sep 16] The toss of a Bitcoin: How crypto ban will hurt 5 mn Indians, 20k Blockchain developers, The Economic Times report.
  • [Sep 16] US Sanctions three alleged crypto hacking groups from North Korea, Coin Desk report.
  • [Sep 16] Crypto firms assess how to comply with anti-money laundering standards, The Wall Street Journal report.
  • [Sep 19] Bitcoin and crypto wallets are now being targeted by malware, Forbes report.
  • [Sep 21] Weekends are for Altcoins when it comes to crypto market gains, ET Markets report.
  • [Sep 21] Chinese officials surprisingly chill on crypto, Decrypt report.

Cybersecurity

  • [Sep 13] Ransomware has a new target, Defense One report.
  • [Sep 16] Deep learning and machine learning to transform cybersecurity, Tech Wire Asia report.
  • [Sep 16] America needs a whole-of-society approach to cybersecurity. ‘Grand Challenges’ can help, Defense One report.
  • [Sep 17] Financial asset firm PCI ordered to pay $1.5 million for poor cybersecurity practices, ZD Net report.
  • [Sep 20] Current Act outdated, need to include cyber security in IT legal framework: DCA chief, The Indian Express report.
  • [Sep 20] 10% of IT budget should be used for cybersecurity: Rear Admiral Mohit Gupta, ET Times report.
  • [Sep 20] Once hacked, twice shy: How auto supplier Harman learned to fight cyber car jackers, ET Auto report.
  • [Sep 21] Cybersecurity a big opportunity for telcos, says IBM executive, The Economic Times report.
  • [Sep 23] Cybersecurity experts raise alarm over new SIM jacking threat, The New Indian Express report.
  • [Sep 23] Cybersecurity: Tackling the menace of phishing, Financial Express report.

Tech and Law Enforcement; Surveillance

  • [Sep 15] Facebook moots ‘prospective’ solution to WhatsApp issue; India stands firm on traceability, Business Today report; Livemint report.
  • [Sep 18] Chinese firms are driving the rise of AI surveillance across Africa, Quartz report.
  • [Sep 18] Documents reveal how Russia taps phone companies for surveillance, Tech Crunch report.
  • [Sep 20] WhatsApp traceability case petitioner asks court to remove Aadhaar from the plea, consider only ‘authorised govt proofs’, Medianama report; Inc42 report; Bar & Bench report.
  • [Sep 20] Chennai-based KPost says traceability is possible, wants to be impleaded in WhatsApp case, Medianama report.

Tech and National Security

  • [Sep 13] Pentagon’s former top hacker wants to inject some Silicon Valley into the defense industry, Defense One report.
  • [Sep 16] Here’s how startups are helping the Defence Ministry up its game, Money Control report.
  • [Sep 16] After 6 years in exile, Edward Snowden explains himself, Wired report.
  • [Sep 17] US tells Saudi Arabia oil attacks were launched from Iran, The Wall Street Journal report.
  • [Sep 17] Why Rafale jets may be inducted into IAF by next summer only, Livemint report.
  • [Sep 17] US Air Force to shift billions of dollars to network its weapons, Defense One report.
  • [Sep 18] India to achieve US$26 billion defence industry by 2025: Defence Minister, Business Standard report.
  • [Sep 18] Mitigating security risks from emerging technologies, Army Technology analysis.
  • [Sep 18] Revised draft defence procurement norms to be ready by November end, The Hindu report.
  • [Sep 20] The NSA is running a satellite hacking experiment, Defense One report.
  • [Sep 20] Army to host seminar on artificial intelligence next week; seeks to enhance lethality, The Economic Times report; India Today report; The New Indian Express report.
  • [Sep 20] Defence Procurement: Not a level playing field for private sector, PSUs still rule, Bharat Shakti report.
  • [Sep 20] Indian Air Force ‘accepts’ Rafale, formal hand over on Dussehra, Livemint report.
  • [Sep 22] Amid US-India blooming ties, Washington prepares to take down Indian air defence systems, EurAsian Times report.
  • [Sep 23] Government likely to order 36 more Rafale fighter jets, The Economic Times report.

Tech and Elections

  • [Sep 20] Social media companies raise concerns over Election Commission’s voluntary code of ethics, Medianama report.

Internal Security: J&K

  • [Sep 16] Supreme Court says normalcy to return to Kashmir but with national security in mind, India Today report.
  • [Sep 16] Farooq Abdullah booked under Public Safety Act, committee to decide duration of arrest: report, Financial Express report.
  • [Sep 17] Amnesty’s report on the (mis)use of Public Safety Act in J&K counters the govt’s narrative, Youth ki Awaaz report.
  • [Sep 18] China says Kashmir issue may not be a ‘major topic’ during Modi-Xi meet, Livemint report.
  • [Sep 19] In Pakistan-held Kashmir, growing calls for independence, The New York Times report.
  • [Sep 20] Kashmir residents say they are being charged by telcos despite no service, The Hindu report.
  • [Sep 20] UN Chief could discuss Kashmir issues at UNGA: UN spokesman, The Economic Times report.
  • [Sep 20] How military drones are becoming deadly weapons across the globe, The Economic Times report.
  • [Sep 22] Modi’s Digital India comes crashing down in Kashmir’s longest ever internet gag, The Wire report; The Hindu report.
  • [Sep 23] No clampdown in Kashmir, only communication line of terrorists stopped: Army Chief Bipin Rawat, India Today report.

Internal Security: NRC

  • [Sep 16] Those declared foreigners cannot file NRC appeal, say Assam govt, Hindustan Times report.
  • [Sep 18] NRC in Haryana, The Tribune report.
  • [Sep 18] NRC is an internal exercise, sovereign right of a country: EAM Jaishankar, Outlook report.
  • [Sep 18] Government will implement NRC across the country: Amit Shah, The Economic Times report.; Times of India report.
  • [Sep 21] NRC Officials issue public advisory against collection of identification documents, Guwahati Plus report.
  • [Sep 22] NRC-exluded Gurkhas not to approach foreigners’ Tribunals, seek empowered panel, The Hindu report; Times of India report.
  • [Sep 14] Final Assam NRC list, with 1.9 million exclusions, published online, Hindustan Times report.

National Security Law

  • [Sep 17] Pulwama to Aug 5: Delhi HC indicted govt for PSA arrests – in 80 pc cases, Financial Express report.
  • [Sep 16] What is the Public Safety Act under which Farooq Abdullah has been detained? News Nation report.
  • [Sep 16] 52 years on, still no sign of national defence university, The Times of India report.
  • [Sep 16] NSA Doval gets national security, foreign policy as PMO defines roles of top officials, The Asian Age report.

Big Tech

  • [Sep 15] Facebook VP Nick Clegg says India’s policies will decide the fate of the internet, Financial Express report.
  • [Sep 17] Facebook Establishes Structure and Governance for an Independent Oversight Board, Facebook Newsroom announcement; Medianama report.
  • [Sep 19] Facebook expands definition of terrorist organization to limit extremism, The New York Times report.
  • [Sep 22] Facebook is experimenting ith AI that lets you digitally get dressed, The Source report.
  • [Sep 23] Google braces for landmark global privacy ruling, Bloomberg report.

Telecom/5G

  • [Sep 16] 5G spectrum auction this year or in early 2020: Telecom Minister RS Prasad, Medianama report.
  • [Sep 20] TRAI opens consultation process for mergers and transfers in telecom sector, Medianama report.
  • [Sep 23] Indian masses have to wait 5-6 years to get true 5G experience, ET Telecom report.

More on Huawei

  • [Sep 17] Facing US ban, Huawei emerging as stronger tech competitor, The Hindu Business Line report, The Diplomat report.
  • [Sep 18] Huawei’s big test will be trying to sell a device with no Google apps outside China, Quartz report.
  • [Sep 18] Huawei users at risk as US blacklist cuts access to shared data on new cyber threats, Forbes report.
  • [Sep 20] Huawei makes sizeable 5G progress, bags 60 contracts: Ken Hu, The Economic Times report.
  • [Sep 21] Huawei unveils 5G training center in UK, ET Telecom report.

AI and Emerging Tech

  • [Sep 14] Artificial intelligence only goes so far in today’s economy, says MIT study, Forbes report.
  • [Sep 16] The US Govt will spend $1 bn on AI next year – not counting the Pentagon, Defense One report.
  • [Sep 18] Facial recognition systems to debut at Pune airport by 2020: report, Medianama report.
  • [Sep 18] AI stats news: AI is actively watching you in 75 countries, Forbes report.
  • [Sep 18] The Intel community ants to identify people from hundreds of yards away, Defense One report.
  • [Sep 19] Google setting up AI lab ‘Google Research India’ in Bengaluru, Entrackr report.
  • [Sep 20] India is planning a huge China-style facial recognition program, The Economic Times report.

Opinions and Analyses

  • [Sep 15] Nitin Pai, Livemint, The geopolitical profile of India tracks the economy’s trajectory.
  • [Sep 16] Paul Ravindranath, Tech Circle, Inclusion in technology is a compelling economic and business case.
  • [Sep 16] Markandey Katju, The Hindu, The litmus test for free speech.
  • [Sep 16] Vishal Chawla, Analytics India Magazine, What India can take away from Google’s settlement on employees’ freedom of expression.
  • [Sep 16] Editorial, Times of India, All talk: Fate of national defence university shows apathy towards defence modernisation.
  • [Sep 16] Jeff Hussey, Forbes, The gap between strong cybersecurity and demands for connectivity is getting massive.
  • [Sep 16] Kai Sedgwick, Bitcoin.com, How crypto became a gamblers paradise.
  • [Sep 17] Ajai Shukla, Business Standard, In picking strategic partners, the defence ministry isn’t spoilt for choice.
  • [Sep 17] Anthony Pfaff, Defense One, The Saudi-Oil attacks aren’t game changing. The Show how the Game has changed.
  • [Sep 17] Kayla Matthews, Security Boulevard, Who’s financially responsible for cybersecurity breaches?
  • [Sep 17] Anirudh Gotety, ET Markets, Check crypto trade, ban won’t help.
  • [Sep 17] PS Ahluwalia, Livemint, Rafale will add heft to IAF’s deterrence capabilities.
  • [Sep 17] Lorand Laksai, Privacy International, How China is supplying surveillance technology and training around the world.
  • [Sep 18] Tabish Khair, The Hindu, In Kashmir, shaking the apple tree.
  • [Sep 18] Catrin Nye, BBC News, Live facial recognition surveillance ‘must stop’ .
  • [Sep 18] Privacy International, the EU funds surveillance around the world: here’s what must be done about it.
  • [Sep 18] Joshua P Meltzer and Cameron F. Kerry, Brookings Institution, Cybersecurity and digital trade: Getting it right.
  • [Sep 19] Lt Gen HS Panag, The Print, Amit Shah’s political aim to recover PoK is not backed by India’s military capacity.
  • [Sep 20] Rifat Fareed, Al Jazeera, Farooq Abdullah’s arrest leaves India with few allies in Kashmir.
  • [Sep 22] Air Marshal (retd) M Matheswaran, Deccan Herald, Time for structural reforms, modernisation.

[June 24-July 1] CCG’s Week in Review: Curated News in Information Law and Policy

With the G20 Summit in Osaka easing trade tensions between the US and China, India has seen a week of developing policy positions on data localisation, tech startups and the fate of telecom providers  — presenting this week’s most important developments in law and tech.

Aadhaar 

  • [June 24] New Aadhaar regulations by Government to bring it back in full force, will be voluntary, India Today report.
  • [June 24] Aadhaar bill introduced amid opposition protests, The Hindu report; Live Mint report.
  • [June 25] Bill on Aadhaar tabled, ‘doesn’t violate privacy’, The Tribune report.
  • [June 29] One nation, One ration card’ scheme from July 1, 2020, The Hindu report.

Internet Shutdown

  • [June 28] Myanmar: Internet Shutdown Risks Lives, Human Rights Watch report.

Free Speech

  • [June 27] Modi Government stops advertising in The Times Group, The Hindu and The Telegraph news paper, PGurus report;
  • [June 28] Modi Government freezes ads placed in Times of India, The Hindu and The Telegraph, The Wire report; The Deccan Herald report.

Data Protection

  • [June 24] UAE data protection law, similar to GDPR, likely landing this year, Tech Radar report.
  • [June 27] Home, IT Ministries discuss data protection bill, The Hindu report.
  • [June 27] National Centre being planned to hold and manage all public data, The Economic Times report; The Quint report.

Data Localisation

  • [June 26] Data storage rules out of e-commerce policy, Live Mint report; CNBC TV18 report; Medianama report.
  • [June 26] Government to decide if data issues need to be out of e-commerce policy, The Economic Times report.
  • [June 27] Personal data storage: Government not in a mood to dilute data localisation rule, Financial Express report.
  • [June 28] India stands by data localisation at G-20 summit, US opposes it, ETtech report.
  • [June 28] Data Localisation: What India can dictate, and what she can’t, Business Today report.
  • [June 29] India surrenders to US pressure on ‘data localisation’: Piyush Goyal and RBI send out confusing signals, National Herald report.

E-Commerce

  • [June 26] Not ready for global e-tail rules, India to tell G-20, ET Tech report.
  • [June 26] India to come out with national e-comm policy within 12 months: Piyush Goyal, ETtech report.
  • [June 27] The E-Commerce disaster that never was, The Economic Times report.
  • [June 30] Draft e-comm policy, data protection may figure at India-EU meet in Brussels on July 4, Your Story report.

Digital India

  • [June 26] Digital literacy drive needs more funds: MeitY, The Hindu Business Line report.
  • [June 27] RBI Committee recommends setting up Universal Enterprise ID, linkage across individual and enterprise PAN, Medianama report.
  • [June 27] MeitY expenditure under Digital India at Rs. 3,328 cr in 2018-19: Ravi Shankar Prasad, The Economic Times report.
  • [June 27] SEBI approves DVRs for tech startups, ETtech report
  • [June 28] Indian startups cheer differential voting rights, ETtech report.
  • [June 28] Nitin Gadkari proposed Alibaba like platform for MSME sector, Entrackr report.
  • [June 30] India’s OTT market will grow at 21.8% CAGR, PwC report says, ET Telecom report.

Cybersecurity

  • [June 25] Digital India’s response readiness against cyber attacks is frail, lack of online security awareness biggest weakness, Firstpost report.
  • [June 27] To avoid Huawei like situation, India plans desi WhatsApp for official communication ET Telecom report; Medianama’s take.
  • [June 28] Infosys cyber security unit sees rising demand as threats mount, ET Tech report.
  • [June 29] US FDA warns of cybersecurity risk to certain Medtronic insulin pumps. Live Mint report.
  • [June 29] Indian manufacturing industry at high cyber risk, The Asian Age report.
  • [June 29] Average DNS attack cost rises by 19% to $814,150 in APAC, ET Telecom report.
  • [July 1] As cyber attacks increase, Indian IT clients seek stricter contracts, more audits, ET Tech report.
  • [July 1] China increases cybersecurity industry development, Global Times report.

Telecom/5G

  • [June 24] DoT may move SC against Airtel, Tata Tele merger, The Economic Times report.
  • [June 26] Broadband forum seeks lower 5G spectrum prices, change in auction design, ET Telecom report.
  • [June 26] Government gets 6 proposals for 5G trials, including Huawei, The Economic Times report.
  • [June 27] Lack of 4G, staff costs slow down BSNL, MTNL, ET Telecom report.
  • [June 27] DoT, MeitY eye EU ‘toolbox’ to address 5G-related concerns, The Economic Times report.
  • [June 28] Telcos’ health needs to be vetted before 5G pricing, ET Tech report.
  • [June 28] Modi, Trump discuss India-US collaboration in 5G tech, ET Tech report.
  • [June 30] DoT will move cabinet with BSNL, MTNL package: Ravi Shankar Prasad, ET Telecom report.
  • [July 1] Ericsson, Nokia assure telcos of speedy 5G rollout, ET Telecom report.

More on Huawei

  • [June 24] Huawei offers to sign ‘no-backdoor’ pact with India govt, telcos to underline security commitment: CEO, The Economic Times report.
  • [June 24] UK’s approach to Huawei is flawed warns Ericsson’s US boss, Financial Times report.
  • [June 26] Nokia warns UK over using rival Huawei’s 5G kit, BBC report.
  • [June 26] Huawei claims 50 commercial 5G deals globally amid uncertainty in India, ET Telecom report.
  • [June 26] US-China trade war in 10 dates, ET Telecom report.
  • [June 26], Huawei’s telecom equipment is more likely to have flaws than rivals’ claims report by US cybersecurity company Finite State, Tech Radar report.
  • [June 26] India, US to discuss Huawei’s role in 5G trials, The Economic Times report.
  • [June 26] India may let Huawei conduct 5G trials defying trump ban, International Business Times report.
  • [June 27] Tech companies find legal ways around Huawei blacklist, ET Telecom report.
  • [June 27] Medianama’s Huawei roundup: Promise of ‘no backdoor’ pact, 5G trial proposal and more.
  • [June 27] Huawei personnel worked with China’s military on research projects, The Economic Times report.
  • [June 28] How the Huawei issue affects India, The Economic Times report.
  • [June 28] Nokia’s CTO slams Huawei after ‘potential backdoors’ found in 55% of its devices, Forbes report.
  • [June 29] Nokia distances itself from CTO comments about Huawei, Tech Radar report.
  • [June 28] As Trump and Xi talk trade. Huawei will loom large, The New York Times report.
  • [June 29] Trump surprises G20 with Huawei concession: US companies can sell to Huawei, Forbes report; Live Mint report.
  • [June 30] Huawei lifeline shows Trump prefers business deals over cold war, Live Mint report.
  • [July 1] Google gets nod to license Android for Huawei, ET Telecom report.

Big Tech

  • [June 26] Google accused of working to prevent Trump return in 2020, ET Tech report.
  • [June 26] Next Google Chrome browser extension to increase data protection, Mediapost report; Forbes report, Medianama report.
  • [June 26] Google and University of Chicago sued over data sharing, The New York Times report.
  • [June 28] Italy stings Facebook with $1.1 million fine for Cambridge Analytica data misuse, TechCrunch report.
  • [June 29] Google may have leveraged Android unfairly, says CCI, Inc42 report.
  • [June 30] Spotify leaking use data with music labels: Report, ET Telecom report.

Emerging Tech/ AI

  • [June 22] White House updated national artificial intelligence strategy, Defense One report.
  • [June 24] Tech Mahindra unveils AI-based Humanoid HR for its Noida facility, Business Standard report.
  • [June 25] IT firms are buying niche firms to grow in emerging areas like IOT, ET Tech report.
  • [June 27] Commission-appointed panel publishes recommendations for artificial intelligence research. Science business report. [Read the full report of the High Level Expert Group appointed by the European Commission here].

Cryptocurrencies

  • [June 26] Facebook’s crypto currency faces pre-G20 examination, Livemint report.
  • [June 27] Crypto exchange Koinex wraps up operations; laments apathy of regulators and banks, Entrackr report, ETtech report, Medianama report.

Tech and Law Enforcement

  • [June 25] Government surveillance at alarming levels: Forrester Global Map of Privacy Rights and Regulations, The Hindu Business Line report.
  • [June 28] Madras HC allows Internet freedom Foundation (IFF) to intervene to oppose plea for linking Aadhaar with social media accounts, Live Law report; Medianama report.
  • [June 29] Have social media companies helped TN Police combat cyber crimes? Affidavit in Madras HC has answers, Bar&Bench report
  • [June 30] Railway police mulls using Aadhaar to track unidentified victims, The Hindu report; Times of India report.
  • [June 30] War on fake news: Government to roll out guidelines for Google, Facebook, WhatsApp, ISPs, Financial Express report

Tech and Military

  • [June 24] Indian MoD approves procurement of 10 more P-8I aircarft for Indian navy, Jane’s Defense weekly report.
  • [June 26] Russia wants to fool its enemies by making its drones look like owls (Uri style), Newsweek report.
  • [June 26] Tatas may soon join queue for drone clearance from DGCA, ET Tech report.
  • [June 26] 41 pieces of space debris from India’s asat test still in orbit, six weeks after they were supposed to decay according to Harvard astronomer, The Independent report
  • [June 27] Defence minister to review services’ emergency weapon acquisitions for war preparedness, India Today report.
  • [June 27] India progresses import substitution projects under Make-II category, Jane’s Defence Weekly report.
  • [June 28] S-400 Triumf missile deal: India mulls Euro payments for Russian arms to escape US sanctions, Business Today report.
  • [June 28] Euro payment won’t end possibility of US sanctions on S-400 deal: Ex-Indian Defence Adviser, Sputnik International report.
  • [June 30] India signs Rs. 200 crore anti-tank missile deal with Russia, Live Mint report.

Opinions and Analyses

  • [June 23] Julian Vigo, Forbes, How cybersecurity is turning users into security experts.
  • [June 23] Nitin Pai, Live Mint, What it would take for India to become a proper space power,
  • [June 24] Satya Prakash, The Tribune, SC’s flip-flop on free speech.
  • [June 24] Tim Cushing, Tech Dirt (blog), Indian Government uses national security law, bad information to block twitter accounts all over the world.
  • [June 24] Michael Schmitt, Just Security (blog) Top Expert Backgrounder: Aborted US strike, cyber operations against Iran and International Law
  • [June 25] Rohan Choudhary, The Telegraph India, India’s strategic challenges in the near future will be naval, not continental
  • [June 25] Bryan Menegus, Gizmodo, This is how you’re being manipulated (by Big Tech)
  • [June 25] Prannv Dhawan and John Simte, Firstpost, Combating fake news: MEITY should allow legal-flexibility based on social media platforms over one-size-fits-all regulatory approach.
  • [June 25] Alon Muroch, Forbes, What’s preventing crypto from going mainstream?
  • [June 25] Geoffrey S Corn, Lawfare, The aborted Iran strike: the fine line between necessity and revenge,
  • [June 25]  Justin Sherman and Robert Morgus, Lawfare, The Confused US messaging campaign on Huawei.
  • [June 25] Live Mint Opinion, Accept Huawei’s offer.
  • [June 26] Sujan R Chinoy, IDSA Comment, Indo-US Defence Partnership: Future prospects.
  • [June 26] Lt Gen (Retd) DS Hooda, News18, India’s New Defence Cyber Agency Will have to Work Around Stovepipes Built by Army, Navy and Airforce
  • [June 26] Goutam Das and Sonal Khetrapal, Business Today,  Does the amended Aadhaar Bill circumvent Supreme Court’s order?
  • [June 26] Cameron F Kerry and Jon B Morris, The Brookings Institute, Why data ownership is the wrong approach to protecting privacy,
  • [June 27] Anirudh Rastogi and Ramani Ramachandran, ET Tech, RBI needs to overcome its fear of legitimate cryptocurrency usage
  • [June 27] Anrnab Dey, The Quint, What is India doing with all its big data?
  • [June 28] Samiksha Goel, Deccan Herald, 5G world will need new cybersecurity approach.
  • [June 28] Pravin Sawhney, The Wire, Nobody Should be surprised if this year’s defence budget hardly sees a boost.
  • [June 28] PK Vasudeva, The Statesman, A three-in-one position.
  • [June 28] Suhasini Haidar, The Hindu, At G20, India stands with developing world- not US, Japan- on 5G and data.
  • [June 29] Robert Farley, The Diplomat, Getting the world to comply with the US Huawei ban won’t be easy.
  • [June 28] Sidhant Kumar, The Economic Times (blog), Protection, or protectionist?
  • [June 29] Siddharth Sivaraman, The Sunday Guardian, Industrial development is a must for defence modernisation.
  • [June 30] Ephrat Livni, Quartz, Facebook’s Libra is spurring central banks’ interest in issuing crytpocurrency.
  • [June 30] Kamal Davar, The Sentinnel/ The Quint,  Security Agenda for Modi 2.0: A national security doctrine
  • [June 30] Arpita Mukherjee, The Pioneer, India should join e-commerce talks at WTO.
  • [June 30] Keshav Murugesh, The Hindu Business Line, Getting to the Digital Summit.
  • [June 30] Shobha Gupta, Bar & Bench, Section 66A: When a celebrated judgment of the Supreme Court cannot be implemented by the police.
  • [June 30] Nishant Sirohi, The Leaflet, AI Technologies: Putting human rights in the forefront.
  • [June 30] Eline Chivot, Financial Times, One year on, GDPR needs a reality check.
  • [June 29] Robert D Atkinson, Information Technology and Innovation Foundation, Trump was right to (Temporarily) Lift the Huawei Export Ban.
  • [June 30] Samir Saran and Richard Rahul Verma, The Print, Here’s how US and India can be major defence partners and take lead over Russia and China.

To B2B or Not: Brief on E-Commerce and FDI Policy in India

By Madhulika Srikumar

Justice Rajiv Sahai Endlaw when hearing a petition in the Delhi High Court on the 23rd of September this year had this to say about ecommerce, “Prima facie, the Union of India/State Governments cannot, on the one hand, for the purpose of tax, treat such sales as retail and on the other hand, for the purposes of investment, not treat the same as retail sale”.  This effectively sums up the confusion around ecommerce and Foreign Direct Investment (FDI) policy in India. Whether ecommerce should be considered as B2B (business to business) or B2C (business to consumer) under the FDI Policy is the question.

The above petition was filed by the Retailers Association of India (RAI) and the All India Footwear Manufacturers and Retailers Association (AIFMRA) seeking clarity on FDI in e-commerce, arguing that ecommerce companies have been acting like retailers which is in violation of the current FDI norms. In the beginning of this month, the Confederation of All India Traders (CAIT) had also raised similar objections in a complaint sent to the Secretary of Department of Industrial Policy & Promotion (DIPP) at the Ministry of Commerce and Industry. The letter in particular singled out Flipkart, Amazon and Snapdeal for flouting FDI regulations when offering huge discounts during the festive season sales. The commerce ministry in turn has requested the Enforcement Directorate (ED) and RBI to look into these companies and examine if they are indeed engaging in retailing activity.

This is not the first time that these ecommerce companies have been pulled up by the authorities. A similar probe was said to have been carried out by the ED placing Flipkart under the scanner back in late 2012. None of them to date have been found to be violating the FDI Policy to date. This could change with the Delhi High Court issuing a notice in the above case to the government (the matter is said to be heard by the High Court sometime soon) directing them to file their affidavit on the matter.

At this point there is no doubt about the increasing importance that ecommerce is going to play in India’s economy, with the industry said to cross the $100-billion mark over the next five years according to an Assocham-Pricewaterhouse Coopers study. Meanwhile the regulatory landscape for ecommerce looks quite shaky and that includes the FDI regulations.

Regulatory Framework for FDI

FDI in India is regulated under the Foreign Exchange Management Act, 1999 (FEMA). The Ministry of Commerce comes out with the investment policy and the amendments in consultation with the DIPP. This is then notified by the Reserve Bank of India (RBI) through press notes and circulars. It is the Directorate of Enforcement (ED) that carries out investigations when it comes to possible violations of FDI Policy.  Penalty under the Act can go up to thrice the sum[1] involved for the guilty entity resulting in the possibility of Flipkart facing a whopping 1400 crore penalty had the earlier ED probe in 2014 found them guilty.  This kind of penalty can reduce a company to bankruptcy quite easily.

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This is what Amazon’s options look like currently

Now India‘s FDI Policy (Consolidated FDI Policy, 2015) permits FDI up to 100% in e-commerce activities.[2] This however applies only to B2B ecommerce (under the Automatic Route) and not to online retailers/e-retailers also known as B2C ecommerce[3]. B2B stands for Business to Business where the trading is between business entities such as manufacturers and wholesalers or between wholesalers and retailers. B2C on the other hand stands for Business to Consumers where online businesses sell directly to the customers.

In September 2012, the Indian government allowed 51% FDI in multi-brand retail, subject to certain conditions. Whereas retail trading in ecommerce for companies with FDI (single[4] or multi brand[5]) is not allowed under the FDI Policy. The 51% FDI limit in multi-brand retail is subject to some conditions where the states take the final call, which might be difficult to translate into ecommerce which has no geographical boundaries.

All this is not to say that Amazon and the rest haven’t found a way out under the existing FDI framework to attract foreign investment. Amazon follows what is known as the marketplace model that is compliant with the FDI Policy of India. A marketplace model in ecommerce, as a Snapdeal spokesperson explained, “(Snapdeal) is a technology platform that connects sellers with buyers to facilitate transactions”. In the marketplace model, the ecommerce company only engages in the activity of buying and selling which is considered B2B and not retail trading under the Policy (see footnote n.3). Therefore under this model the ecommerce company does not carry out any retail transactions and does not directly sell anything to the customer. Instead the ecommerce platform earns commission from sellers of goods/services for their services. This move to operate as a marketplace enables Amazon[6]and Flipkart which are both majority-owned by foreign investors to still function in the Indian market without running afoul of the FDI Policy.

What Amazon can’t do is run an inventory based model. In this model, ownership of goods and services and the marketplace vests with the same entity. As a comparison India is said to be the only one among a list of developed and developing economies that does not allow FDI in inventory based ecommerce. Keep in mind that in the marketplace model, ownership of the inventory vests with the enterprises who are the ultimate sellers of the goods/services.

Does Ecommerce fall under B2B or B2C?

This section looks at what CAIT, AIFMRA and other brick and mortar associations are complaining about when it comes to e-commerce companies like Amazon, Flipkart among others. Their primary concern is that e-commerce companies are acting like B2C retailers while enjoying foreign investment that is only legal for B2B enterprises.

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One of the possible FDI Models as laid out in the paper by Arkay & Arkay and Medianama

The CAIT has pointed out that the intensive advertising campaigns carried by the marketplaces should not be considered B2B activity as these initiatives are directed towards the consumers to promote their sales.  Further, the CAIT questions how these ecommerce platforms offer such massive discounts when they have no inventory at their disposal. AIFRMA in their Delhi HC petition argued that marketplaces in ecommerce in India operate as retailers since the payment, delivery, returns and refund are all handled by these companies.

The other accusation made against these companies is that they do in fact have inventories and do not perform as mere marketplaces. In September 2014, the ED was directed to look into Amazon and examine if they are making the sales instead of the vendors. The Karnataka Government also had suspicions about the “fulfillment centres” belonging to Amazon alleging that Amazon “owned” the products in such centres.  Interestingly when Flipkart was incorporated in 2008, it started out as an inventory-based B2C model that had to be changed to the B2B marketplace model after raising foreign funds in 2012.  The change however was made only in April 2013 leading to an investigation by the ED on Flipkart functioning as a B2C with FDI during 2012-2013. Again, none of these ecommerce companies have ever been found to be violating FDI Policy.

While the marketplace model is practiced by Amazon, Flipkart and others, there are also other structures through which foreign investors can enter the Indian ecommerce market legally.  One of the structures for instance can be found in the image above.  The Delhi HC petition also addressed concerns that ecommerce companies have been creating complex business structures to evade the law. One such case study is that of Amazon Asia’s stake in Cloudtail (see image below), one of the largest sellers on Amazon India. Amazon through Cloudtail can therefore dictate pricing among other things and in effect acts like a retailer. This of course pales in comparison when it comes to Flipkart and their dominant seller WS Retail that accounts for 85% of the total products sold on the portal over the past three years.  Flipkart does have operational control over WS Retail even now. This, after the famous corporate restructuring that Flipkart carried out in 2012 which included the divesting of WS Retail.  Ecommerce companies are doing all this to make sure that the companies are an arm’s length from directly selling to the consumers.

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Amazon being clever: image from ISID paper by Rahul Nath Choudhury

Way Forward

Which brings us to the next question of whether companies should be penalized for creating such business structures or is it time to allow for FDI in B2C ecommerce instead? The DIPP considered the pros and cons of doing so in their Discussion Paper that came out in January 2014 and sought out public opinion. The government has held discussions with several stakeholders including ecommerce companies and bodies such as FICCI, NASSCOM and CII this year. There have also been several reports of foreign retailers like Amazon and Ebay lobbying with the Indian government to permit FDI in online retail in India. It is clear that there are valid arguments both for allowing FDI in e-retail and not. It is crucial however that the government decides on this soon to ensure that the current FDI framework is not manipulated and its purpose defeated. It is also worth exploring how the government can impose conditions (and what conditions) on companies with FDI in online retail, if it were to be allowed.

Fundamentally more clarity is required with respect to the definition of the term marketplace and the difference between retail and wholesale trading[7] on online platforms. With FDI not being the only regulatory concern for ecommerce in India, seeing as concerns regarding taxation of these goods/services and anti-competitive behavior by these companies have also been brought out, maybe it is not a bad idea to go back to the drawing board to figure out the definition of ecommerce in India. A better understanding of what ecommerce in India entails will help characterize it either as B2B or online retail which in turn can bring the “violations of FDI Policy” debate to an end.  Answers are expected soon from the government after the commerce and industry ministry received responses from various states on this matter a few days ago. The Vidhi Centre for Legal Policy in a report has proposed for a law to be passed by the Parliament under Entry 42 of the Union List[8] to govern goods/services of online marketplaces and those sold directly on the Internet. Moving forward a uniform policy on ecommerce across states will provide much-needed clarity albeit it has to be done in the near future.

[1] As per S.13 of FEMA, 1999, penalty imposed can be thrice the sum involved in the contravention where such amount is quantifiable.

[2] DIPP Press Note No. 8 of 2015, Annexure 1, paragraph 6.2.16.2.1 allows 100% FDI in B2B Ecommerce activities.

[3] Under paragraph 6.2.16.2.1 of the Consolidated FDI Policy of 2015 (effective from May 12, 2015), 100% FDI is permitted only in B2B ecommerce activities, “E-commerce activities refer to the activity of buying and selling by a company through the e-commerce platform. Such companies would engage only in Business to Business (B2B) e-commerce and not in retail trading, inter-alia implying that existing restrictions on FDI in domestic trading would be applicable to ecommerce as well.”

[4] Under paragraph 6.2.16.3 of the Consolidated FDI Policy of 2015, “Retail trading, in any form, by means of e-commerce, would not be permissible, for companies with FDI, engaged in the activity of single-brand retail trading.”

[5]  Paragraph 6.2.16.4 of the Policy provides, “Retail trading, in any form, by means of e-commerce, would not be permissible, for companies with FDI, engaged in the activity of multi-brand retail trading.”

[6] Amazon India (Amazon Sellers Services Private Limited) for instance was set up as a wholly owned subsidiary by Amazon Asia-Pacific Resources Pvt. Ltd., Singapore in 2012, incorporated in Bangalore. They had entered the Indian ecommerce market before through the acquisition of Junglee.com way back in 1998 which came into operation in 2012. Junglee.com, a price comparison website, was also set up under the marketplace model.

[7] Currently under paragraph 6.2.16 of the Consolidated FDI Policy of 2015, B2B ecommerce is considered as wholesale trading.

[8]  Entry 42 of the Union List covers inter-state trade and commerce.

(Madhulika Srikumar is a Research Assistant at CCG and a final year student at GNLU)