Five Times When the Centre Intervened Impacting Country's Startup Ecosystem

The Narendra Modi-led government has been well-known from making sweeping changes in decades-old laws

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The Narendra Modi-led government came into power at the Centre in 2014 with a thumping victory. He was given the mandate mostly because of his excellent oratory skills, his ability to establish a strong connection with the common man, his vision to make India a superpower and more importantly to bring significant changes in the system the country runs on.

PIB
Prime Minister Narendra Modi

Keeping aside his political inclination and ideology, in his first term itself he along with his team of ministers took some disruptive decisions such as demonetization followed by the introduction of the Goods and Services Tax.Though the saffron party received major flak from opposition parties it continued to bring in changes in decade old, untouched laws. This year we were in the middle of a pandemic, but that didn’t sulk the government’s spirit to bring reforms.

Here is a look at five instances when the government intervened to bring in change that even impacted tech-related companies.

Farm Laws

The latest in the line is the newly passed three farm laws that has sent shockwaves across the country, even inviting comments from foreign leaders. The laws have led to a huge unprecedented farmers protests at the national capital and other parts of the country. The three laws passed by the central government are the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, and the Essential Commodities (Amendment) Bill.

The Essential Commodities (Amendment) Act proposes to remove commodities such as pulses, oilseeds, onion, potatoes and edible oils from the essential lists, thus allowing hoarding. Stock-holding limitations that were earlier imposed on these commodities will only be in place under extraordinary circumstances such as war, famine and other natural calamities.

The Farmers (Empowerment and Protection) Agreement or Price Assurance Act will help to build a national framework on farming agreements that protects and empowers farmers to engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services thus allowing contract cultivation. The bill will allow farmers to enter into a written contract for the product supply at an agreed price for better remuneration.

Third, the Farmers’s Produce Trade and Commerce Act allows  farmers to sell their product wherever they like. This means that they don’t have to sell it to a designated APMC mandis. Anyone can buy their produce even at their farm gates. The act also provides a transparent and barrier free inner and inter state trade.

Majority of the agritech firms have supported these contentious farm laws. According to Shashank Kumar, founder and chief executive officer (CEO) of DeHaat, the new bills will be beneficial in the longer run as it will create an alternative channel for farmers to sell their products and even boost India’s agriculture productivity. Tauseef Khan of Gramophone said that these bills are the first step towards free market trade.

Ban Of Chinese Apps

The ties with our neighbour China has only degraded this year. The first crack formed with the outbreak of the virus as China failed to handle the virus. This was followed by the new FDI rules brought in place by the government of India. The new FDI regulations imposed by the Indian government prevents any neighboring country sharing land borders with India from making direct investments in Indian companies, and need to seek approval. This was primarily done to prevent hostile takeovers by China of Indian companies. This decision brooded many startup founders majorly with investments in Series C and above range. The ties that rested on thin ice now were further stretched after the long standoff between the soldiers of both the countries over LAC causing the death of around 20 Indian soldiers.

Soon India responded by banning Chinese apps which it called ‘digital strike’. Till now the ministry of electronics and information technology has banned a total of 224 apps citing that these apps were engaging in activities which are prejudicial to sovereignty and integrity of India, defence of India, security of state and public order. Some of the popular apps that were outlawed in this move were TikTok, PUBG, AliExpress, Shein and others. The move gave an impetus among Indian app developers to make indigenous apps that will replace these Chinese apps.

OTT  and Digital News Platforms Under IB Ministry

The central government has decided to bring the widely watched OTT platforms such as Netflix, Amazon Prime, Disney+Hoststar, and others along digital news platforms under the ambit of the information and broadcasting ministry.

The government amended the Allocation of Business Rules, 1961 and decided to bring OTT platforms and digital news platforms under IB Ministry to ensure a level playing field across all segments of media.

Up until now, OTT platforms had a little to no restriction and were under the purview of the ministry of electronics and information technology. For some time now, there has been a call for a need to regulate the OTT platforms in India as there is no government body tasked to monitor the content that is being widely shared. Television channels are needed to stick to the Cable TV Act whereseas films have to get certified from CBFC before they are screened at theatres. However, others say, this is an attempt to muzzle artists’ freedom.

The decision also comes after 15 OTT/digital streaming platforms including Netflix, Amazon Prime, Disney+Hotstar had agreed to sign a code of self-regulation under the ambit of IAMAI. However, the IB Ministry later asked IAMAI to look at other self-regulatory models. It had then said that the proposed regulatory mechanism lacks independent third party monitoring, and fails to have a well-defined Code of Ethics.

Similarly for news platforms, press media is looked at by the Press Council of India whereas television news is monitored by News Broadcasting Standards Authority.

National Education Policy

The National Education Policy (NEP) is a comprehensive framework for the education system in our country. NEP is typically passed at an interval of 10-15 years. The first NEP was passed in 1968, whereas the second was announced in 1986 under the leadership of Indira Gandhi and Rajiv Gandhi, respectively. This NEP was later revised in 1992  under PV Narasimha Rao. The Indian government claims that this NEP aims to address the many growing developmental imperatives of India.

Some of the major changes brought in by NEP includes mandatory age of joining schools reduced to three thus increasing the span of Right to Education to 3-18 years; the new policy goes away with 1986s 10+2 format and replaces it with to 5+3+3+4 system to add three years of kindergarten/playschools under the ambit of formal education system. The new policy stresses on the mother tongue and calls for students until class 5 to be taught in mother tongue/regional language. Indian sign languages to be standardized. In higher education, undergraduation courses will be set to either 3 or 4 year duration with multiple exit options. NEP tol allow foreign universities to set up their campuses in India and all higher education institutes to become multidisciplinary institutions are among the few changes made by the government of India. The booming edtech startup ecosystem which received $2.22 billion investment this year has hailed the new policy.

Fantasy Sports

The government’s think tank NITI Aayog in December has proposed setting up of a single self regulatory body for online fantasy sports (OFS) in India. Under a draft titled ‘Guiding Principles for the Uniform National Level Regulation of Online Fantasy Sports Platform in India’ NITI Aayog noted that while OFSPs operate through online media on a pan-India basis, their regulation proceeds under varied State-wise regulatory regimes which might impact fantasy sports users’ interests of transparency, OFSP operator integrity, and fairness may vary from state to state. It further goes on to highlight  instances of unscrupulous operators luring users with games of questionable legality in the name of fantasy sports. 

In order to boost the fantasy sports industry in the country which is anticipated to generate around 1.5 billion transaction by 2023 and attract FDI worth more than INR 10,000 crore in years to come, the government’s think tank has initiated this discussion to examine the fantasy sports industry structure and consider evolving guiding principles that can help the industry to grow by adhering to guidelines which are consistent and based on well-recognised principles.

Commenting on the government’s intervention, Bimal Julka, chairman, Federation of Indian Fantasy Sports (FIFS) said, “FIFS welcomes NITI Aayog's draft guiding principles around online Fantasy Sports as it will provide the required impetus to the responsible growth of the online Fantasy Sports industry in India. I applaud Shri Amitabh Kant, CEO NITI Aayog and his team for an in-depth understanding of the sector, distinguishing Fantasy Sports as sports engagement platform, and taking the initiative to unlock the value of the Fantasy Sports industry in India.”