Hi there! It’s February, and with it, the annual Union Budget. In this edition, we bring you a bit of the budget buzz, along with our usual programming on tech law and policy. Let’s get at it!
In a slew of measures announced by the finance minister Ms. Nirmala Sitharaman, ‘Atmanirbhar Bharat’ emerged as the cross-cutting theme in this year’s Union Budget. Ms. Sitharaman announced production linked incentives (PLI) for manufacturing companies in 13 sectors, proposed to commit enhanced budgets for micro, small and medium enterprises (MSMEs), increased the expenditure in public health to promote health and wellness centres in the country, and suggested to revise the basic custom duty regime to support domestic manufacturing.
Additionally, the government extended the timelines for start-ups to claim tax holidays and capital gains exemption by one more year, enhanced the paid-up capital and turnover thresholds for a ‘small company’ under the Companies Act 2013, and allowed ‘one person companies’ to easily convert to any other legal entity. The government also deferred the payment of income tax on employee stock options. Read how such a step positively impacts start-ups in an explainer authored by Janarth, here.
Ms. Sitharaman announced incentives to promote digital payments, and set up of a fin-tech hub at the Gujarat International Financial Tec-City.
We pulled out the key highlights of the Budget, here.
The Economic Survey of India
Technology was a prominent theme in this year’s Economic Survey. It highlighted the last-mile connectivity issues in India’s healthcare infrastructure, and suggested increased use of telemedicine solutions. This would also complement other technology solutions being employed in the National Digital Health Mission (NDHM). Currently, the NDHM is in the pilot stage, with sandbox testing occurring in six Union Territories. Shambhavi explains how the private sector is best placed to provide technical solutions for creating and sustaining the NDHM by participating in the proposed NDHM sandbox in this piece for our blog. Additionally, the Survey highlighted that the use of Government e-marketplace (GeM) made the public procurement process more efficient with increased transparency and reduced costs.
The legislative agenda of the ongoing budget session of Parliament includes a bill to introduce a digital currency backed by the Reserve Bank of India (RBI) and ban private cryptocurrencies. However, the text of the bill will be publicly available only after it is tabled in Parliament. In 2019, a similar bill to ban the use of cryptocurrencies was released by an Inter-Ministerial Committee, but it was never tabled in Parliament. Reports suggests that this new bill may be the 2019 bill itself. Earlier in 2018 the RBI prohibited banks from dealing in cryptocurrency. However, the Supreme Court of India overturned the RBI’s circular in March 2020. We represented several cryptocurrency exchanges in the Supreme Court. Read our take on all things blockchain and crypto, here.As the Joint Parliamentary Committee (JPC) is examining the draft Personal Data Protection Bill (Bill) and is yet to table its report in Parliament, the Bill did not find a place on the legislative agenda for the budget session.
The RBI proposed to introduce a four-layered (base, middle, upper, and top) pyramid structure for NBFCs, with incremental level of intervention. The framework, anchored on proportionality, will allow low-scale low-risk NBFCs to operate freely, and exercise greater control over high-value high-risk NBFCs. For more developments in the fintech space, subscribe to our new monthly newsletter- FinTales! Read past issues here, and subscribe by emailing firstname.lastname@example.org with the subject “Sign me up for FinTales”.
The Ministry of Electronics and Information Technology (MeitY) released the draft national strategy on blockchain for comments. Comments are due by 16 February, 2021. The strategy proposes to execute a ‘national level blockchain framework’ consisting of a blockchain infrastructure (‘technology stack’), and to potentially develop a specific regulation for blockchain. It also sets out a roadmap to boost the adoption of blockchain, particularly in the public sector. Additionally, the draft strategy identifies the challenges in deployment of blockchain, which notably includes difficulties in adhering to data localisation requirements (as nodes would be situated across the world), and the RBI’s ban on crypto-currencies.
E-commerce and logistics
The NITI Aayog is planning to set out a roadmap for MSMES, which will address issues that impede MSMEs from onboarding e-commerce platforms and expanding their reach across the country. The Aayog may also propose to set up a government backed e-commerce platform for MSMEs, which would be run and developed by private entities.
Additionally, reports indicated that the government may drop the proposed national e-commerce policy due to lack consensus on various issues between different government ministries. This comes after the department for promotion of industry and internal trade (DPIIT) held an inter-ministerial consultation with the MeitY, ministry of corporate affairs, and ministries of finance and agriculture to discuss the policy. The policy discussed hasprovisions on data, a separate regulator for e-commerce, and government access to e-commerce data for the purposes of security, law enforcement, taxation, among other things. The DPIIT also revealed that the government will issue a clarification to the existing FDI policy that restricted an e-commerce marketplace from selling its products on the platform run by such marketplace entity.
In other news, the union commerce minister Piyush Goyal indicated that the national logistics policy will enable better coordination and integrated development for logistics, and enhance the ease of doing business in India. The policy (currently under consultation) seeks to cut down the cost of logistics, streamline processes, enable seamless movement of goods, and integrate different modes of transport through technology platforms, and more. The draft policy was released for comments in February 2019. Logistics was also a thrust area in this year’s Budget, with the government announcing the establishment of dedicated freight corridors in eastern and western India, and increased funding to augment road and railways infrastructure across several states.
We are celebrating!
Recently, TheLegal500, one of the world’s most well-regarded research and ranking firms for lawyers, recognised us as a ‘Band 1’ firm in data protection, and designated Nehaa as a ‘Leading Individual’ in the same category. We were ranked as a ‘Band 2’ firm in the TMT category. Anirudh was designated a ‘Next-Generation Partner’ in the aviation and aerospace category, where we were ranked as ‘Band 3′ firm. Tanya and Sreenidhi were recognized for their “strong working knowledge of technology law and data protection regulations”. Aparajita and Darpan were also recognized as go-to lawyers for their work. We are humbled by the kind words our clients had to say about us. They write:
“Ikigai’s work on data protection matters exhibits a clear understanding of the law as well as technology.” “Anirudh Rastogi and his team are just awesome; they are prompt, proactive and diligent. Plus one USP they have over others is active development of domain expertise in aerospace/space-related structures and policy. Would also give full points to Neha Chaudhari and Tanya Sadana.”
“Nehaa Chaudhari is one of the foremost legal and technology experts in India. She exemplifies the qualities of a legal counsel who understands the business model, the technology and then arrives at the most suitable legal solutions.”
“Anirudh give super overall advice, and clear-cut coherent solutions to all our problems.”
“Tanya Sadana is super prompt and gets the work done.”
That’s not all! Chamber and Partners, widely recognized as a leading authority on legal rankings worldwide, also ranked us as a ‘Band 3’ firm for Fintech and TMT. Anirudh was ranked a ‘Band 1’ Fintech lawyer. Chambers and Partners quote our clients’ praise for our “very serious focus on tech-centred businesses”, appreciation for having “often already experienced the seemingly unique situations that [they] take to [us]”, our ease in understanding complex, technical concepts, our familiarity and understanding of “the entire spectrum of issues”, and our ability to provide “both the Indian and the international context.”
We are beyond grateful and look forward to doing some good work in 2021.We hope January was kind to you as well, and look forward to seeing you again soon!