Regulating Emerging Technologies and Digital Businesses

10 October 2019
Regulating Emerging Technologies and Digital Businesses
HIGHLIGHTS OF SECOND WORKSHOP AS PART OF ‘NAVIGATING INTERACTIONS BETWEEN TECHNOLOGY AND POLICY’ SERIES

About the Wokshop

As part of our initiative to engage with law and policy makers, the Technology and Society Initiative at CPR launched a new series on ‘Navigating Interactions between Technology and Policy’. The focus audience for this initiative are Legislative Assistants to Members of Parliament (LAMP) fellows, parliamentary aides and others directly involved with law and policy making in India. This three-part series of workshops, consisting of talks and presentations by experts from and outside CPR, followed by lively interactions, aims to shed light on current debates pertaining to technology.

The second workshop in this series, with its focus on emerging technologies and related regulatory frameworks, was conducted at the CPR Conference Room on 26th September 2019. The discussion had three segments and was led by key resource persons in the form of individual presentations followed by a round of questions and answers. This was moderated by Ananth Padmanabhan, Visiting Fellow at CPR.

Drone Regulations

To present the perspective of the government on new technologies, Akhilesh Tilotia, a former Officer-on-Special Duty to the Minister of State for Civil Aviation, shed light on the debates around drone regulations in India. Drones or unmanned aerial vehicles (UAVs) have offered wide ranging applications across sectors like agriculture, property surveys, infrastructure management and other beneficial use cases. Every new technology is weighed on the scale of ‘good versus bad’, which is a flawed approach. Policymakers aim towards either minimising the harmful effects and externalities of policy or maximising innovation. In an attempt to save the society from ill-effects, sometimes governments end up throttling genuine businesses and innovators. In most cases, the government initially resorts to a complete ban in the anticipation that industry players would later approach them with the problems that the ban would cause for them, and then seek to address those issues one-by-one. This might not be an appropriate approach but still remains a common practice by governments around the world to attain a realistic and nuanced regulation. Drones, from being under a complete ban are now being regulated through ‘No Permission, No-take off’. The key challenges with drones are that of privacy, safety and security. However, Tilotia referred to the ‘Red Flag Law’ in the early days of the automobile revolution and argued that society does take some time to adapt to new technologies. The government’s response in the form of policies and law is expected to ease the rate of adoption. He also highlighted the importance of shifting the responsibility of intimation to the individuals who are using the technology rather than seeking prior permission from the government before acting further. 

E-Commerce Regulations

Advancing a similar line of thought, Arjun Sinha, a legal and policy consultant to multiple e-commerce businesses, provided an overview of the e-commerce regulations in India. The definition of e-commerce encompasses, ‘buying and selling of goods and services including digital products over digital and electronic network’. According to this definition not all internet platforms classify as e-commerce businesses. Out of the prominent examples like Uber, Flipkart, Urban Clap and Urban Ladder, only Flipkart qualifies as an e-commerce company in the conventional sense. Focusing on Foreign Direct Investment (FDI) norms and parallel developments at the World Trade Organisation (WTO), he traced the history of e-commerce policy and regulation in India. In January 2019, the Department of Industrial Policy and Promotion (DIPP) reiterated that FDI in multi brand retail was prohibited in an inventory-based e-commerce model. In 1997, the wholesale trading (cash and carry) was executed 100% through the government route. In 2006, cash and carry retail was partly permitted under automatic route. In 2007, Flipkart was launched in India and by then online trade was already being viewed as a win-win situation for all the stakeholders: consumers, traders and the government. A global moratorium on customs duties over electronic transmissions was already in place, following which the 11th Ministerial Conference of the WTO held in Buenos Aires in 2016 advanced a proposal to make this moratorium permanent. This proposal had the opposite effect, compelling India to develop a nationalistic vision on the subject, reflected in a draft e-commerce policy that was leaked in 2018. Though withdrawn later, a subsequent draft also proposes bringing e-commerce business platforms under higher scrutiny particularly on themes like consumer protection and taxation. Key issues such as data localisation and data sharing with customers and vendors also found presence here. Press note 2 of 2018 has raised new operational barriers on digital platforms. A report by the Finance ministry was published on taxation of internet companies and the issue is being discussed globally. However, there is no domestic e-commerce law in sight yet. 

Cryptocurrency Regulations

Shantanu Sharma, President of Blockchain Chamber of Commerce (India Chapter), spoke next, addressing the regulatory issues surrounding blockchain technology, bitcoins and cryptocurrencies. An Inter-Ministerial Committee of the Government of India has recently published a report along with a draft bill, recommending a ban on cryptocurrencies. This ban bears striking resemblance to the early action taken against civilian drones by the Directorate General of Civil Aviation in 2014. Interspersed with technical details, Sharma’s presentation highlighted the areas of concern for governments when it came to this technology. However, the technology has immense benefits too. Markets are dominated by technology leaders who shape and control the digital and internet architecture. This has the effect of furthering the centralisation of data and network power, and stifling competition. Decentralisation, serving as a counter-weight to this trend, is at the heart of blockchain technology. This technology essentially replaces a ‘third-party trusted intermediary’ with mathematical proof of the transaction that is verifiable by all actors without reliance on such intermediary. Bitcoin, in the words of its creator Satoshi Nakamoto, is  ‘purely peer-to-peer version of electronic cash which would allow online payments to be sent directly from one party to another without going through a financial institution.’ 

Conclusion

In conclusion, all speakers laid emphasis on the need to move away from knee-jerk bans on emerging technologies to formulating a principle-based framework which can efficiently regulate unpredictable innovations.

Highlights of the first workshop of the series on Privacy in the Times of Live, Constant and Mass Data Processing can be read here.

The views shared belong to individual faculty and researchers and do not represent an institutional stance on the issue.