Technology Policy Has Placed India at a Defining Crossroads

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Prime Minister Narendra Modi’s Indian government, in its first term, began by positioning India as a global technology hub. It embraced investment by the world’s leading companies, resulting in a vibrant technology sector characterized by international and Indian players – including small and medium enterprises – succeeding and offering Indian consumers innovative products and services. This vibrancy fueled India’s socioeconomic development and became a defining pillar of India’s lauded identity and ambition on the international stage.

That is all at stake.

Part of that government’s first term, especially the final year or so, saw moves in multiple policy areas – three of which are discussed below – that risk repelling investment in technology. With that government back for a second term, policymakers can choose to proceed with or even amplify those moves (potentially emboldened by the government’s resounding electoral victory) or adopt a reasonable approach – aligned with the spirit of the first part of the government’s prior term – that pursues legitimate regulatory goals without undermining investment and its profound benefits.

Data Protection

The Ministry of Electronics and Information Technology’s (MeitY’s) draft cross-sector data protection bill – harsher in many ways than the EU’s General Data Protection Regulation (GDPR) – risks deterring investment and innovation, without making data materially safer. Its concerning aspects include excessive restrictions on cross-border data flows, overly limited grounds for data processing, criminal liability, significant ambiguity regarding obligations, wide governmental powers to use personal data, and numerous others. In parallel, the Department of Promotion of Industry and Internal Trade’s (DPIIT’s) draft e-commerce policy, articulating data protection obligations, is inconsistent with MeitY’s draft bill, often far exceeds its obligations, and is highly ambiguous.

Free Speech

Triggering free speech concerns – and raising profound questions about the direction in which Indian society is headed – broad Indian laws have spurred numerous arrests of individuals for posting social media content that is considered offensive to the government, including satirical material. In fact – alarmingly – law enforcement authorities have continued invoking one such law, Section 66A of the Information Technology (IT) Act, despite the Indian Supreme Court overturning it.

Separately but relatedly, MeitY’s proposed expansions of intermediary liability under the IT Act may sound the death knell for free speech (and privacy) online, and also for investment in platforms that facilitate online expression. For example, these expansions let the government take highly invasive actions (such as demanding traceability in relation to private messages) for reasons worded so broadly that they arguably amount to “any reason at all.” They also ignore the efforts many platforms already take to handle inappropriate content. Critically, given the wide definition of “intermediaries,” these expansions impact a much larger set of companies than indicated by the government’s stated purpose of these expansions (curbing misinformation on social media).

Separately, commendably, and despite continuing pressure from some groups, the government has so far resisted regulating content on nonintermediary video streaming services, encouraging self-regulation instead. Retaining this stance, including in the national broadcast policy being developed, would benefit investors and consumers.

Competition

The DPIIT’s draft e-commerce policy suggests that successful foreign companies should share data with Indian companies to help them grow. This free-riding, combined with the express preferencing of Indian companies over international ones, is the opposite of one of the policy’s goals: fair competition. It is also inconsistent with multiple observations by the Competition Commission of India (CCI), India’s competition regulator, that have not so far found competitive concerns in the e-commerce space.

Relatedly, the CCI has generally shown commendable restraint when analyzing India’s technology space, often refusing to intervene without concrete evidence of competitive harm, and often recognizing that competition law must protect consumers, not competitors. This is especially commendable given the unduly broad language of India’s competition law and the pressure the CCI has faced from some domestic groups. In the interest of Indian consumers, and also investment from Indian and international companies, the CCI must retain this approach as it continues to consider matters in India’s technology sector, including its recently launched study of India’s e-commerce space.

The Need of the Hour: A Reasonable Approach

As policymakers consider next steps on these and other technology policy issues, they should opt for a reasonable approach that meets valid regulatory objectives while ensuring investment and innovation flourish. Elements of a reasonable approach include:

First, policymakers should thoughtfully consult all stakeholders, including industry participants. The interests of companies and consumers are far more aligned than may seem. Companies that seek to benefit by disrespecting consumers may do so at most in the very short term. Companies seeking durable success aim to establish consumer trust while providing high-quality, innovative services. Additionally, companies can offer vital insights into several key matters, including how consumers use various products and services, and matters requiring technical expertise.

Second, policy proposals must be drafted carefully to prevent ambiguity, and such that they are tailored to the policymakers’ objectives.

Third, different parts of the government must work together when developing policy proposals, to prevent a fragmented landscape and the resulting regulatory inconsistencies.

Fourth, policies should create level playing fields, encouraging competition on the merits, rather than advantaging Indian companies over international ones. Competition on the merits, by definition, provides consumers with the best products and services.

Fifth, when reviewing practices in other jurisdictions to help policymaking in India, Indian policymakers should carefully consider which jurisdictions to look to. They should not be bound by convention (e.g., looking only to Europe for legal matters). They should consider a range of jurisdictions, particularly regions that resemble India specifically in the context being analyzed, (rather than resemble India more generally). For example, when assessing competition matters in the technology space, policymakers should review policies in regions that have as vibrant a competitive landscape as India does.

Sixth, policymakers should avoid knee-jerk reactions, and take a long-term view. Hasty decisions taken in response to current concerns can inadvertently but significantly inhibit emerging and transformative technologies, including artificial intelligence and the Internet of Things.

Seventh, policymakers should resist conflating regulatory activity with regulatory success. In other words, choosing not to intervene can often create the healthiest outcomes. For example, as academics argue in relation to competition law and policy in the context of innovation, the likelihood of erroneous decisions is high (given the complexity involved), and the harms flowing from over-enforcement outweigh the harms flowing from under-enforcement. In other words, policymakers should intervene only when faced with concrete evidence of harm.

Nikhil Sud is a Regulatory Affairs Specialist with Albright Stonebridge Group’s South Asia practice.