The Modi government’s policies can make India the next Silicon Valley—or the next China

Operate within the boundaries.
Operate within the boundaries.
Image: Reuters/Krishnendu Halder
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Prime minister Narendra Modi’s “Digital India” dream appears to be getting shackled to legislations that control and censor online activity.

Since Modi came to power in 2014, he has enjoyed a massive following on Facebook, Twitter and Instagram, and invited foreign tech behemoths to invest in India. But these firms are constantly under scrutiny—especially when they become hubs of dissent around topics like farmer protests or Covid-19 mismanagement.

“India does not have a clear vision whether it wants to have a tech industry that’s on the lines of Silicon Valley or China. The desire to control everything by the bureaucracy directly conflicts with the entrepreneur’s desire to innovate,” Mishi Choudhary, a technology lawyer with a practice in New York and New Delhi, told Quartz. “We need a data protection and policy framework, no criminal liability for company executives for user-generated content, surveillance reform, more resources for competition commission and experts—not bureaucracy or old tech entrepreneurs—to guide policymaking.”

Choudhary’s criticism stems from some of the internet-related rules introduced in India in recent years—including the data protection bill and the social media rules that have put an invisible target on the back of these companies.

The problem with India’s data privacy and internet freedom

India’s legislation specifically aimed at information technology companies first came in the form of the Information Technology Act, 2000, which governed all digital technology matters. The regulation provided a framework to carry lawful and trustworthy electronic, digital and online transactions, and put in legal safeguards against cybercrimes.

However, two decades later, the way Indians use the internet to make transactions, invest and save money, and consume content, among other things, has drastically changed. Consequently, various amendments have been made to this umbrella policy.

These changes, many believe, are being used as an opportunity to clamp down and control what happens on the internet. For instance, a 2019 data protection bill calls for Indians’ data to be stored within the country, which is a logistical and infrastructural nightmare for many global players. But more worryingly, it’s a sign of an overbearing government and its surveillance reform.

More recently, the Information Technology (Guidelines for Intermediaries and Digital Media Ethics Code) Rules 2021 have a worrying traceability clause that mandates social media platforms to “enable the identification of the first originator” of information if required by the authorities. Under the ambit of these rules released in February, the government is also coming down hard on over-the-top (OTT) players. Moreover, the policy also asks these internet businesses to elect a grievance officer to be available at the beck and call of law enforcement officials.

Besides threats to privacy, freedom of expression is also being attacked by a slew of rules.

Since the February intermediary rules came into play, Twitter’s office has been raided and authorities have asked the company, along with Instagram, and Facebook, to remove hundreds of posts. On the OTT side, several web series makers have been apologising and cutting scenes to avoid lawsuits and arrests. In addition to content certification and self-censorship, there’s a government body that can override the decisions on any OTT content.

“Such wide powers without constitutional or parliamentary backing are a grave threat to the freedom of speech…,” an Internet Freedom Foundation blogpost noted. The way in which they’re implemented will have a “chilling effect on fundamental rights of the citizens of India, not just on the creator side, but also on the consumer side.” Platforms will begin self-censoring more harshly to avoid government scrutiny.

Additionally, the bill “significantly strengthens the power of the state to regulate the behaviour of businesses that collect personal data and, at the same time, grants the Indian government the latitude to allow any government agencies to opt-out of complying with the bill’s requirements,” Anirudh Burman, associate fellow at Carnegie Endowment for International Peace, wrote in March 2020. “This has resulted in a paradox where privacy legislation can significantly undermine privacy interests.”

The worry is that the government is picking the wrong battles.

India’s IT laws haven’t kept pace with new-age technologies like artificial intelligence, cloud, mobility, internet of things, and quantum computing. And the gamut of issues that come with India’s internet revolution has been largely ignored. “…specific areas of cybersecurity, information theft, IP infringement, and adequate punishment and protection from such crimes remain neglected,” said Salman Waris, managing partner at law firm TechLegis.

The data protection bill proposed three years ago detailed how citizens’ data should be collected, stored, and shared. But after a long delay, pressing issues of data ownership, data privacy, data storage, and so on, are still not supported by robust regulation. In fact, over time, that regulation has been poked at to a poor end. “The law should have been in place three years ago. The 2019 draft is a much-diluted version. Much weakened. It is disastrous,” retired justice Srikrishna said in a July 2021 interview.

India’s tech laws are bad for business

India is already perceived to have an unfavourable business environment, ranking 48 out of 57 countries on the ease of Internet entrepreneurship. Restrictive tech regulations only further the fears of failure in a hostile market.

For one, the localisation proposal in the 2019 bill will “severely compromise the ability of the digital economy from benefiting on its efficiencies. It further creates a barrier to market entry that will potentially isolate India from new innovations in the internet space,” according to Sidhant Kumar, a New Delhi-based advocate. “One must be wary of regulation replacing commercial decision making in a market economy. This is even more crucial for the technology and internet sector where change is the equilibrium.”

Then, OTT platforms will be forever be scrambling to add age limits, respond to complaints, and alter content to stay compliant. Moreover, if platforms have to become more selective about content, cut scenes from international shows, and more, their business prospects stand diminished, too.

On the e-commerce side, new consumer protection rules from June prohibit flash sales on the likes of Amazon and Flipkart and put the liability of failure on the seller’s part on the marketplaces. This kind of scrutiny is misguided, experts say. “We should let the market drive change in areas like e-commerce rather than legislate specific guidelines around inventory-based and non-inventory-based models,” says independent tech sector analyst Harish HV. “These result in players adapting business models to meet regulations in letter than in spirit.”

What makes matters worse is that all the reforms have been piecemeal. There is a “lack of adhesion and clarity” in the various rules being tossed around, said Waris of TechLegis.