Virtual Digital Asset Tax Architecture in India: A Critical Examination

Description: This report is the first empirical exercise to estimate the impact of India’s tax policy on centralised Virtual Digital Asset (VDA) exchanges, that are similar to stock exchanges for digital assets. It examines the impact of three events on the centralised virtual digital asset (VDA) industry in India, announced on 1st February 2022 during the Union Budget 2022-23: (a) a levy of a flat 30 percent tax on gains from VDA trade applicable from 1st April 2022; (b) a levy of 1 percent tax deducted at source (TDS) on transactions above INR 10,000 from 1st July 2022; and (c) the provision disallowing the offsetting of losses applicable from 1st April 2022s.

Attribution: Dr. Vikash Gautam. Virtual Digital Asset Tax Architecture in India: A Critical Examination. Special Issue No. 208, January 2023, Esya Centre.

A Screen and A Mirror: Seven Decades of Indian Cinema

Description: The report delves into cinema's transformative role in storytelling and societal impact, highlighting its universal appeal beyond the elitism of literature and high art. It examines cinema's power to influence, citing historical misuses like D.W. Griffith's racist narratives and Nazi propaganda films. Focusing on post-1947 India, the report explores how cinema became a pivotal medium for shaping national identity and reflecting the country's diverse socio-political landscape, offering insights into the complex interplay between film and the formation of community identities in the world's largest democracy.

Attribution: Vani Tripathi Tikoo and Akshat Agarwal. A Screen and A Mirror: Seven Decades of Indian Cinema. Special Issue No. 207, December 2021, Esya Centre.

Aligning Labour Reforms with India's Digital Aspirations

This Policy Brief comes on the heels of reports that the Central Government has deferred the implementation of the latest Labour Codes, for want of state-level rules.

The latest labour law reforms of the Modi Government constitute four distinct Codes on (a) wages; (b) social security; (c) industrial relations; and (d) occupational, health, safety and working conditions. They were enacted to consolidate and update an obsolete framework.

While the proposed labour reform extends social security benefits to gig workers, its overall implications for the digital economy remains mixed.

The Policy Brief suggests that certain elements of the Codes, remain out of sync with key attributes of the digital economy, namely economies of scale, network effects and the importance of momentum.

Moreover, the new labour codes add rigidity, uncertainty and regulatory discretion in terms of hiring, work hours, labour management and firing costs—that will negatively impact the digital economy.

For instance, the Occupational Safety, Health and Working Conditions (“OSHWC”) Code restricts employers from engaging contract labour in their ‘core’ activities.

The Policy Brief concludes with concrete suggestions which can improve the framework’s overall suitability for Digital India.

These suggestions include a strong focus on targeted income support for gig workers and specific measures to operationalise the delivery of benefits for gig workers under the Social Security Code.

Further, the Policy Brief suggests means to reduce regulatory discretion through i) adoption of clear standards and procedures; and ii) promotion of self-certification schemes for digital businesses.

Attribution: Deb, Sidharth and Chawdhry, Mohit. Aligning Labour Reforms with India’s Digital Aspirations. Policy Brief No. 206, April 2021, Esya Centre.

Database Regulation: Examining Existing Approaches and Considerations for India

Regulators around the world are scrutinising tech companies—the US, EU, India and other jurisdictions are filing competition lawsuits against large digital platforms, and the EU as part of its digital data strategy recently released drafts of the Digital Services Act, Digital Markets Act, and Data Governance Act on competition, content moderation, platform liability, and other aspects of digital technology. In India the government recently released draft frameworks for non-personal data regulation (the NPD Report) while a Joint Select Committee in Parliament is deliberating on the draft Personal Data Protection Bill, and the government indicates interest in a focus on developing artificial intelligence and related technologies.

Data is at the core of how digital platforms provide the products and services we use today, and is central to their functioning. It also has wider implications, and the transition from a paper-based system to a digital one offers multiple advantages not always related to technology: permitting better management of information, increasing security and efficiency, and providing information and insights to enable better decision making. Data is also being used at an unprecedented scale, in public service delivery, finance, healthcare, transportation, and marketing. A variety of stakeholders are collecting increasing volumes of data, whether personal, non-personal or a combination of the two.

Yet vast amounts of data are not useful in themselves without ways to make sense of them. This is what many emerging technologies do, from machine learning to the wide range of tools named ‘artificial intelligence’—they are methods to analyse and derive value from large volumes of data, and in many cases the way they work improves when given more diverse data to analyse. It is only possible to do so by ordering and organising data into specific formats depending on the intended use: this is the role of a database.

This paper examines how databases are afforded protection and details some key considerations for database regulation in India. It explores database protections in other jurisdictions, primarily the European Union and the United States. Section 1 defines a database, 2 explores the protections afforded by copyright law, 3 examines sui generis or standalone database protections, 4 explores protection by unfair competition laws, 5 examines the protections prevailing in India, and 6 lists emerging considerations and policy recommendations.

Attribution: Aishwarya Giridhar, “Database Regulation: Examining Existing Approaches and Considerations for India,” Special Issue No. 205, Feb. 2021, Esya Centre

History of TV Broadcasting Regulation in India

According to the Broadcast Audience Research Council over 197 million Indian households had a television connection in 2019.1 As of July 31, 2020 the Union Ministry of Information and Broadcasting (MIB) had permitted 920 TV channels to operate. The television broadcast ecosystem has three stakeholders: broadcasters, distributors, and consumers. Broadcasters make content for TV and distributors provide it to consumers using one of four technologies: cable, direct to home (DTH), head-end in the sky (HITS) or internet protocol (IPTV).

A complex web of actors regulates the broadcast ecosystem in India, including the MIB, TRAI the Telecommunications Regulatory Authority of India, and self-regulatory bodies such as the Broadcasting Content Complaints Council and the News Broadcasting Standards Authority. The Department of Space and the Department of Telecommunications’ Wireless and Programming Coordination Wing regulate the use of satellites and spectrum.

The Telegraph Act 1885 and the Indian Wireless Telegraphy Act of 1933 require broadcasters and distributors to register their service. The Cable TV Network (Regulation) Act of 1995 (CTN Act) formalized this registration. At the last mile, local cable operators register with post offices in their territory. State governments have empowered Monitoring Committees at the state and district levels to enforce provisions of the CTN Act– mainly its programme and advertising codes.

Since 2004 the broadcast sector has been regulated by TRAI. The central government expanded the Authority’s powers in 2011 through an amendment to the CTN Act, which together with a 2004 notification from the erstwhile Union Ministry of Communications and Information Technology empowers TRAI to regulate tariffs, including the MRP of channels, the terms of interconnection between broadcasters and distributors, and standards for quality of service at the consumer end.

TRAI’s legacy in the broadcasting sector is one of excessive economic regulation and restrictive price controls. Having expanded its regulatory remit over broadcasting the State did not enhance expertise or capacity, within TRAI or the quasi-judicial Telecom Dispute Settlement Appellate Tribunal (TDSAT). The result has been formulaic, TRP driven television content, and higher costs for subscribers3 and there is no mechanism to enforce quality of service at the last mile.

Since the CTN Act in 1995, Parliament has thrice considered a specialised regulator for the broadcasting sector. On numerous occasions Parliament and specialised committees such as the Nariman Committee have backed the proposal for a specialised regulator, and seminal judicial pronouncements including the ‘Airwaves Judgment’ have highlighted the need for a specific law and a specialised regulator for the sector. Despite these efforts TRAI continues to regulate the broadcast sector, although its oversight was meant to be temporary. This brief explores the history of attempts to introduce a parallel regulatory regime for broadcasting in India, which may help explain why governments have always preferred to expand TRAI’s powers rather than establish a specialised regulator for broadcasting.

Attribution: Varun Ramdas, “History of TV Broadcasting Regulations in India,” Policy Brief No. 204, Oct. 2020, Esya Centre.

Modernising Collective Copyright Management in India

This brief explores the reform of collective copyright management in India. Section 1 sets out the current landscape while Section 2 describes the models of collective management used in other jurisdictions – Brazil, the Nordic countries, the European Union, the United Kingdom, and the United States – and also details some digital solutions. Section 3 concludes with takeaways for India and recommendations for reform – including legislative and administrative reform, structural reform in copyright societies, and increased transparency. Ultimately, the effective functioning of any collective management system will require implementing the Copyright Act’s mandates for CMOs, and ensuring the efficient functioning of administrative bodies in the copyright ecosystem, for effective redressal. While the Copyright Act does provide some safeguards, as discussed, there is ambiguity in the text on its applicability to various organisations. Therefore, there is an urgent need to amend the Copyright Act, reform the functioning of the Intellectual Property Appellate Board, and streamline enforcement mechanisms.

Attribution: Aishwarya Giridhar, “Modernising Collective Copyright Management in India,” Policy Brief No. 203, Oct. 2020, Esya Centre

Towards a National Broadcasting Policy: For an Industry in Transition

Since the introduction of broadcasting (radio in 1927, which later included TV broadcasting in 1959), the broadcast industry has become a key part of India’s social fabric. For instance, broadcasting has served as a key medium for the government to disseminate information to the masses, and serving as a mirror to society. In terms of monetary value, broadcasting generated revenues of INR 771 billion in 2018, which is projected to increase to INR 994 billion by 2021. It was also estimated by the Media and Entertainment Skills Council (MESC) that the broadcasting industry would have employed 3.1 lakh people by 2017.

Further, as a core avenue of dissemination for India’s creative economy, the broadcasting sector has successfully created synergies with other segments of the creative economy, especially films, where distribution avenues remain limited. For instance, India’s screen density remains abysmal, with eight screens per million people, compared to China’s 16, and US’ 125 screens per million people. Unsurprisingly then, broadcast rights accounted for 21.2 percent of the film industry’s revenues in 2018, and radio remains one of the most important platforms for marketing and promoting new music.

Moreover, broadcasting holds immense value economically, socially and politically, serving as a powerful development tool. As recognised by the World Bank, the power of broadcasting is premised on the “widespread accessibility”, “ease of use” of technologies, and the wide spread of distribution networks. Different countries have sought to regulate broadcasting to realise the emancipatory potential of the sector. Countries such as the US and the UK use economic regulation to remedy market failure, whereas Canada and France intervene to ensure that the broadcasting industry promotes creative expression and local cultures and diversity. The EU, with which India’s policy stance is aligned in several technology-driven areas, is situated in the middle of this spectrum. It endeavours to ensure that high-quality and diverse content is available and ‘findable’, and that the widest possible audience has access to such content.

In India, the broadcasting sector was initially leveraged by the state to facilitate national integration and dissemination of information to the masses. With privatisation and liberalisation, the approach to regulating broadcasting changed to enable access and promote competition. Today, maximising access to broadcasting as a policy objective has been largely addressed, as 197 million households today subscribe to TV, with private radio channels in over 100 cities and the All India Radio (AIR) reaching 99.19 percent of Indians in 23 languages. Moreover, 88 per cent of TV households have now been digitised, enabling access to a wider selection of channels and content, and a better quality of service. However, quality and choice of content remains suboptimal, with homogenised and formulaic content serving a characteristically diverse and heterogeneous populace. As per the latest figures from BARC, the highest number of channels in most languages today fall in the general entertainment content (GEC) genre.

On an average, approximately 52.07% of fictional GEC programming in every language consists of dramas and soaps. On the other hand, programming for other genres like horror, action/thriller, and comedy remains miniscule in comparison. Viewership patterns, on the other hand, indicate higher demand for certain genres, in comparison to the proportion of such programming carried.

This is paradoxical, since there are few other industries which are as strongly driven by consumer preferences as the media industries. Cultural sensibilities, demographic diversity and socio-economic evolution directly and constantly affect the success of content offerings and distribution platforms. Therefore, it is imperative for systemic reforms to incentivise the creation of high-quality content which is accessible to the widest audience possible, and to strengthen the forces of market competition towards delivering a rewarding consumer experience. Policy and regulatory impetus should thus be geared towards maximising consumer welfare, which entails providing consumers with high quality, diverse content at affordable prices.

Evolving Scope of Broadcasting

With the advent of internet-based content services, and the growing adoption of IP-based broadcast transmissions, competition in the content consumption and distribution spaces has improved. The TV and Radio industries are seeking to address related market challenges through network expansion, consolidation and strategic leveraging of digital opportunities. For instance, advertising on TV is being bundled with digital advertising to provide better value to advertisers. Similarly, TV programming is being coupled with a host of interactive services on digital platforms to drive stickiness of linear television. Illustratively, on air programming of television shows like Satyamev Jayate were coupled with engagement campaigns on social media. Consumers are also presented with increased content and service standards through personalized feeds on the digital medium. This is complemented by a wide availability of affordable and niche content on demand. Thus, digital content disruptions have presented opportunities for the broadcast industry to provide more interactive and creative content along with a heightened viewer experience.

Owing to these crossovers with the digital content space, the scope of ‘broadcasting’ has come to be revisited in law and policy frameworks around the world. For instance, Canada is currently awaiting recommendations on a joint review of its broadcasting, radiocommunications and telecommunications regulations. In this regard, a key question for consultation is how broadcasting (encompassing radio and TV services) can remain relevant as part of a broader, shifting, communications landscape.

While the understanding of broadcasting was previously based on analogue transmission of content for reception by the public, the meaning of broadcasting has come to be understood more broadly to include encrypted transmissions through cable and satellite as well. For instance, the Prasar Bharati Act defines broadcasting based on “transmission of electromagnetic waves”, and the intention for reception by the public through relay stations. As such, the understanding of broadcasting has typically taken a conjunctive understanding of the following considerations:

a. Means of transmission (wired or wireless): Where wireless implies transmission through Hertzian/ electromagnetic waves as well as satellite, and wired implies by cable or fibre;

b. Control over the transmission (close or managed versus open communication networks): Where the transmission takes place under the control and responsibility of the broadcasting organisation; and

c. Manner of consumption (one to many, and push based): Where the transmission has been made publicly available for reception by the public, such that transmission signals have been emitted; it is immaterial whether or not they are in fact received by specific members of the public.

Such an understanding of broadcasting has thus typically excluded dissemination of content over computer networks, and where the venue and timing of receiving the transmission is chosen by the consumer. However, such definitions are being revisited with the advent of convergence as transmission protocols, means of access, and the range of services rendered across different media overlap.

Distinguishing Regulation from Policymaking

At the same time, regulation of broadcasting continues to remain a complex issue, even if the scope of the sector has come to broaden through additions to existing definitions. For instance in India, the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007, includes continuous streaming of content in “digital data form on the computer networks”, which may be accessible to single or multiple users. At the same time, content and carriage distinctions remain vital to defining the scope of services regulated, whereby ‘broadcasting content services’, and ‘broadcasting network services are distinctly defined and corresponding obligations tailored specifically.

The distinct rationale for regulation for radio and TV broadcasting stems from such services being reliant on scarce spectrum: as spectrum is a scarce public resource, its use remains licensed by the government so as to fulfill its role as a custodian of this resource. Furthermore, the Supreme Court has also underpinned the use of a teleport, which is only allowed by operators licensed under the Wireless Telegraphy Act as the basis for regulation of broadcasters. Therefore, TV and radio have been tightly regulated -- beginning from complete monopoly of the government to licensed regulation for private broadcasters post liberalisation and privatisation.

In the internet realm, the absence of dependence on scarce spectrum and teleports does away with the need to regulate services in the same manner as TV and radio. Thus, the contemplation of any regulation of digital streaming must account for the specific market failures that need remedy through state intervention. Notably, digital media accounted for only 11.8% of the Media and Entertainment sector in 2018. However, the absence of regulation has facilitated tremendous growth with digital media being the fastest growing segment at 41.9% in 2018, when it reached an estimated 12-15 million households.

Looking Forward

In this evolving context of broadcasting, it will be necessary for policy and regulatory frameworks to be reimagined to reflect the realities of this transition. To this end, government focus must be on:

1. Enabling TV and radio broadcasters to keep pace with their digital counterparts: It is important to liberalise existing regulatory frameworks to ensure they do not hold back investments in a consolidating and evolving business environment; and

2. Facilitating innovation and consumer welfare: Given the nascence of online media markets, any regulation should be tailored to address clearly identified harms, and based on assessments of its impact on innovation and consumer welfare.

At this stage, it is prudent for government to undertake an independent assessment of the country’s broadcasting landscape. Here, relevant considerations are: trends and likely drivers of change; potential for new services and models; sustainability of revenues; the needs and preferences of audiences; consumer behaviour; platform and distribution developments; and, the efficacy of the extant regulatory frameworks. At the same time, the complex of legislative and regulatory frameworks must be harmonised. Illustratively, the Ministry of Information and Broadcasting (MIB) is currently tasked with legislation and policymaking for television, radio, and the press, while the Ministry of Electronics and Information Technology (MEITy) holds the mandate over all matters relating to information technology and the internet. The ambit for telecommunications, including licensing and policymaking for telegraphs, telephones, wireless and data, along with the administration of the Telegraph Act, Wireless Telegraphy Act and the TRAI falls within the Department of Telecommunications (DoT).In this context, it would be prudent for the MIB to establish a National Broadcasting Commission along the lines of the Digital Communications Commission (erstwhile Telecom Commission), which was set up in 1989 to serve as the policy-making wing of the DoT. Such a commission could include technical members from different arms of government, as well as from industry and academia, who can help shape the future of harmonized policymaking for broadcasting.

Attribution: Research Team, “Towards a National Broadcasting Policy: For an Industry in Transition,” Policy Brief No. 201, June 2019, Esya Centre.

Non-Personal Data: Policy and Regulatory Considerations

The past year saw significant developments in India’s data protection landscape. The Personal Data Protection Bill (PDP Bill) was introduced in Parliament in December 2019, and is under consideration by a Joint Parliamentary Committee. It aims to set out the governance framework for personal data and establish a Data Protection Authority for the purpose. Non-personal data, which does not relate to the data of identified individuals, remains outside the ambit of the PDP Bill. The Union Ministry of Information and Technology (MeitY) also constituted a committee under the chairmanship of Kris Gopalakrishnan (Committee) to suggest pathways for the regulation of Non- Personal Data (NPD). In this introductory brief we introduce the concept of NPD, trace related developments, and suggest the contours of subsequent research.

Attribution: Mohit Chawdhry, “Non-Personal Data: Policy and Regulatory Considerations,” Policy Brief No. 202, May 2020, Esya Centre.