India: Views: Can Law And Policy Promote A Culture Of Innovation?

Last Updated: 19 April 2018
Article by Kartik Maheshwari and Gowree Gokhale

This article was originally published in the 13th April 2018 edition of The Times Of India.

While India has its share of unicorns, most have adapted global business models. We are yet to see Indian companies revolutionizing the global market. Steve Wozniak, co-founder of Apple, recently attributed this lack of "creativity" to our education system, an often ignored but important aspect are sound governmental policies that promote innovation and laws which don't impede it.

It's now a cliché that law lags behind technological innovations. Therefore, the question then arises, is there a need for governmental intervention? If yes, why and to what extent? Often, the tendency to introduce regulation is due to the fear of the unknown or as a reaction to the actions of one rouge industry player.

Therefore, the onus is on the industry players to act responsibly.

Innovative businesses need to voluntarily self-regulate to ensure that the interests of all the stakeholders including the government are respected. The government must act as an enabler and work in collaboration with the industry to identify and plug gaps in the present policy.

We saw a spate of new drafts being released recently by way of a Digital Information Security in Health Care Act., Committee report on Artificial Intelligence, Committee to regulate online content, Space Activities Bill, Drone Policy, consultations to regulate the Cloud, M2M, among others. While the consultative process of is commendable, the need and timing of each of these drafts is yet to be determined. In this context we must evaluate the steps taken by law makers and suggest a possible approach for regulatory intervention which can be adopted when a new technology gains critical mass to ensure that laws do not act as an impediment to innovation.

  • How should law and policy be adopted in the context of the Indian situation--Net neutrality principles as are adopted in developed countries may not necessarily fit in well in the Indian context in an as –is manner without taking into account the development of the infrastructure, the role of telecom operators, development of OTT services, and others.
  • Examine what is the likely mischief and whether the current law is sufficient to address that. An example, with the increasing importance of data, data theft, is a possible mischief. Therefore, it is to be evaluated whether the existing provisions of "theft" under the Indian Penal Code adequately address that mischief? Law of tort is often an ignored body of law in India. Several principles such as vicarious liability, negligence, trespass and nuisance can be applied in several instances. E,g, in cases of accidents by driverless cars, the contributory negligence principles under tort may very well apply.
  • Focus on implementation of present laws. Given that the government is actively repealing irrelevant laws, before enacting new laws, the focus needs to be addressing issues arising with the implementation of the existing laws. One of the reasons identified for the introduction of a new data protection framework was the fact that the implementation of the existing data protection laws had failed.
  • Examining the extent of regulation in line with purpose. When digital payments increased, the risk of misuse of customer funds spawned and therefore a technological solution in the form of two-factor authentication was introduced. However, the establishment of two-factor authentication, the additional imposition of monetary limit to the transactions, may not necessarily be required.
  • Intervene only where there is a specific and recognized need to intervene.There must be a demonstrated failure of the industry to act responsibly which warrants governmental intervention. E.g. the RBI in a surprise move recently introduced a data localization requirement for all payment systems. This requirement has taken the entire industry by surprise since it was introduced without any public consultation and there does not appear to be any specific incident or market failure to have precipitated this requirement
  • What sanctions should be imposed? Whether the law should impose only civil liability or criminal as well, if there is a point of contention. India is on the cusp of introducing data protection law. One aspect that has been debated is whether the imposition of penal sanctions is required. There has been ideation by a Committee of Experts to allow criminal penalty for violations concerning data protection. However, criminal sanctions will only deter innovation and make businesses risk averse. Professors Elizabeth Pollman & Jordan M. Barry in their paper on Regulatory Entrepreneurship recognize that "if a law provides for the incarceration of the executives of a company that violate it, that may deter the guerrilla growth strategies that some modern regulatory entrepreneurs employ".
  • Building capacity. It appears that whenever the government is not comfortable in understanding how a technology works, its first response is to try and ban a technological advancement as was the case with drones in India in 2014. Later the government progressed in its outlook by recognizing the possible benefits / uses of drones and introducing a draft policy in that regard. With several such examples, the RBI's recent directions against virtual currencies seems inexplicable. The mere fact that a technology or business model is possible of being misused cannot be grounds for banning an entire industry, this goes against the ethos of an innovation based economy. Therefore, it is imperative that the regulators, industry participants and technical experts all work together to assuage any concerns before a formal policy is unveiled.
  • Are we giving enough clarity to businesses? Two points here. First, more often than not, regulators and law makers make statements indicating an intention to regulate new technology or business models which create uncertainty in the market without any legislative or policy being enacted as was the case with bitcoins and is now playing out with the MIB's plans to regulate online content and news. Second, since technologies are evolving and are often abstruse, capturing them in words is difficult. Therefore, the drafting of the laws and regulations should be carried out by taking assistance of experts in the field.
  • Lack of concerted / consolidated efforts to address the overlapping issues.Given that various regulators may get involved in regulating startups, the Government needs to demarcate the jurisdiction of each regulator due to a clear lack of inter-departmental liaising. For the industry, clarity in terms of the regulatory body who they should engage with is crucial. For example, in the past the TRAI and MeitY and now RBI and the Ministry of Health are all looking to regulate data in India, creating confusion in the market.

Therefore, the need of the hour is for the government to rethink its strategy while dealing with emerging technological advancements and new business models. A concerted intra – departmental effort to apply restraint in regulating the unknown and even going as far as allowing businesses to operate in the 'grey' is what we need to give rise to our homegrown startups that can rival the likes of Airbnb, Tesla, Uber, and others which are said to have grown at a scorching pace because they operated in a regulatory grey area! This approach will also force incumbent startups to adopt higher standards of corporate governance that take into account interest of all stakeholder to give confidence to the government to act as an enabler rather than a disruptor.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Kartik Maheshwari
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
 
Email Address
Company Name
Password
Confirm Password
Position
Industry
Mondaq Newsalert
Select Topics
Select Regions
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions