Crafting a Liability Regime for AI Systems in India

Description: As AI systems become more pervasive, the question of liability for AI-related harms becomes increasingly critical. This paper attempts to address the questions surrounding the creation of liability rules around AI technologies. Specifically, it tries to tackle the debate on whether AI systems merit the blanket application of strict liability rules or a more contextualized and targeted framework.

Attribution: Meghna Bal and N S Nappinai. Crafting a Liability Regime for AI Systems in India. September 2024, Esya Centre and Cyber Saathi Foundation.

Quantification of Intangible Cultural Assets

Description: A study on Quantifying the Contribution of Intangible Cultural Assets (ICAs) to the Economy of Rajasthan, under the aegis of the Chief Minister’s Rajasthan Economic Transformation Advisory Council (CMRETAC). It lists out a comprehensive set of policy recommendations for protecting, preserving, and promoting ICAs in the state. This is a pioneering study in the country, owing to its state-wide coverage.

Attribution: Quantification of Intangible Cultural Assets. December 2022, Chief Minister Rajasthan Economic Transformation Advisory Council (CMRETAC), Department of Planning Rajasthan, and Esya Centre.

Devising an Emerging Market Perspective for Competition Regulation in the Digital Age

Description: This report is first in a series on Indian Perspectives on Competition Regulation in Digital Markets co-published by the Observer Research Foundation (ORF) and the Esya Centre. It is a synthesis of insights that were shared during a discussion, convened by the Esya Centre and ORF, among stakeholders belonging to the public sector, industry, academia, and consumer interest organisations as a first step towards formulating a position on digital competition regulation for India.

Attribution: Meghna Bal, et al., Eds., Devising an Emerging Market Perspective for Competition Regulation in the Digital Age, November 2022, Observer Research Foundation and Esya Centre.

Market Study on Film Distribution Chain in India

Description: With Esya Centre as a Knowledge Partner, the Competition Commission of India (CCI) conducted a Market Study on Film Distribution Chain in India.

The purpose of the study was two-fold. One, to understand the state of competition in the film industry in view of the evolving industry dynamics related to digitization. And two, to identify issues related to competition that can be resolved or mitigated through self-corrective measures to limit the need for Commission’s interventions, with a view to encourage the production and dissemination of content and overall wellbeing of the stakeholders in the ecosystem and address bargaining power imbalances across the value-chain, if any.

The study employed a combination of desk research and primary research that included focus-group discussions, one-on-one meetings, post-discussion surveys, and written submissions of stakeholders. The study highlights some of the key competition issues in the film distribution chain in India, as identified by stakeholders. In doing so, the study discusses the role of various associations in the chain, be it at the production, distribution, or exhibition level; the superior bargaining power of some entities and the resultant imbalances; the bottlenecks that exist at various levels; unequal distribution of risks; revenue-sharing arrangements; new-age technologies in cinema; tying and bundling arrangements at the exhibition level, etc.

The study provided key insights into conceptual and analytical questions such as the relevant market, assessment of the bargaining power of industry constituents, and objective commercial justifications for certain conduct. Relying on the findings from this study and under its advocacy mandate, the Commission has recommended the film industry to devise certain self-regulatory measures for various categories of stakeholders.

Regulating Crypto Assets in India

Description: The report outlines India's booming crypto industry, advocating for clear regulations to balance innovation with policy risks. It suggests adopting a safe harbour similar to internet intermediaries, analyzing international regulatory models, and recommending a co-regulatory approach involving SEBI, RBI, and the Ministry of Finance. Key proposals include defining crypto assets broadly, making exchanges the focal point of regulation, enhancing investor protection, and ensuring interoperability and safety in crypto transactions.

Attribution: Bal, Meghna; Venkatesan, Shweta and Ramdas, Varun. Regulating Crypto Assets in India. Monograph, November 2021. Observer Research Foundation and Esya Centre.

Bridging the Transparency Gap: A Comparative Assessment of Surveillance-Related Transparency Efforts in the United States and India

Description: This report delves into the extensive government surveillance programs in the United States and India, emphasizing the need for transparency in operations involving user data. It suggests recommendations for both governments and companies to enhance accountability, aligning with international principles on human rights in communication surveillance. Specific recommendations include legal reforms, granular data publication on surveillance requests, transparency on data audit processes, and collaboration with civil society. The report encourages U.S. companies to disclose more information related to government surveillance activities in India.

Attribution: Singh, Spandana and Bal, Meghna. Bridging the Transparency Gap: A Comparative Assessment of Surveillance-Related Transparency Efforts in the United States and India. Special Report, August 2021. Esya Centre and Open Technology Institute.

Nine Principles for India's Digital Economy

Global mobile data traffic was around 456 exabytes in 2019, of which India accounted for around 75 exabytes or around 16 percent, according to Ericsson. Around 14 percent of the global population resides in India and, consequently, the country punches slightly above its weight in terms of mobile data consumption. The size of India’s opportunity to unlock value through such consumption, is perhaps without parallel in the developing world. This can be achieved through a principles-based framework for governance of information technology (IT). The nine principles detailed in this brief can also aid the design of a new-age IT legislation, that fosters innovation, competition and growth:

Principle 1: Legal Recognition

Provide adequate legal recognition and clarity to new digital businesses

Principle 2: Level Playing Field

Level the playing field for small digital businesses and entrepreneurs to compete effectively, through

deregulation

Principle 3: Risk-Based Regulation

Encourage regulations that are activity-specific and prioritise consumer welfare over state control

Principle 4: Functional Classification of Intermediaries through Co-Regulatory Model

Leverage coregulation to help digital intermediaries evolve, innovate and scale

Principle 5: Transparent and Accountable Self-Regulation

Employ self-regulatory and co-regulatory bodies to offset the need for legacy regulatory constructs.

Principle 6: Platform Neutrality

Ensure that large businesses do not discriminate between equal business partners, and consequently reduce the probabilities of gatekeeping.

Principle 7: Privacy and Security by Design

Promote product and platform design that helps local companies access global markets with low compliance costs.

Principle 8: Fair, Reasonable and Non-Discriminatory

(FRAND) Terms Guide business conduct through the FRAND principle, to minimise the need for economic regulation.

Principle 9: Trust and the Global Internet

Promote the use of standards and protocols that build trust in the internet and leverage the wealth of Indian experience in multi-stakeholder collaboration and open design.

Attribution: “Nine Principles for India’s Digital Economy” Special Report, September 2020, Digital India Foundation and Esya Centre.

Compulsory Licensing for Radio-Play Of Music in India: Recent History and Economic Context

Compulsory licensing of sound recordings is practiced in different countries, though the trajectories and rationale for arriving at this framework may differ. Developing countries often introduce measures to protect “infant” industries, but policy persistence can make subsequent changes hard. In 2010, the Copyright Board of India passed an order prescribing 2% of net advertising revenues to be paid by radio stations as compulsory license fees to copyright owners, citing the infancy of the private radio industry and the lack of access to music in India. Since the original order, the private radio industry has matured in size, coverage and listenership. Access to music today is facilitated through a far-reaching radio network, as well as widespread mobile and internet usage. The original order will be reviewed in September 2020.

The immediate issues that arise from this order include lack of clarity who the order applies to, a potentially short-sighted approach through subsidizing the radio industry at the cost of the underlying music industry, and a long lock-in period that fixes the rate despite advancements in broadcasting technologies. The radio industry has grown in revenue at an annual average of 15.6% over the past decade. Companies have expanded into new distribution platforms and revenue sources such as online platforms and YouTube, and can be expected to benefit from digital transmission, which allows multiple stations to be broadcast on a single frequency.

With a large number of private and public radio stations that together cover 92% of India geographically and 99% of the population, access through radio has arguably been achieved. In addition, consumer surveys show listeners have affordable access to music via the internet on smartphones.

Given the advancements since the original order, the main recommendation of this paper in the review by the IPAB that is coming up in September 2020 is to aim to determine the fair market value for music in the Indian market and try to achieve the “efficient” outcome. These cannot be currently determined due to lack of data in the public domain, but the regulator can calculate this with data requested from the radio broadcasters and applying strategies described in the past literature for countries with mature markets. Any positive or negative spillovers from the radio industry in terms in of exposure and substitution as well as on the diversity of content can be then be incorporated to adjust the initial allocations.

Attribution: Review of Economic Research on Copyright Issues, 2020, vol. 17(1), pp. 60-77

Note: This paper, published in the RERCI, is shared here with the author’s permission, who is a Fellow at the Esya Centre. It is not a co-publication.

COVID-19 and India’s Media and Entertainment Sector: Recommendations for Recovery

The Reserve Bank of India (RBI) expects negative economic growth this year. The slowdown has adversely affected production and distribution across most industries, and will likely hit markets fuelled by discretionary spending the hardest. These include the Media and Entertainment (M&E) sector— comprising TV, radio, print and digital media, as well as Over the Top (OTT) platforms for audio and video streaming—which is expected to see an “L-shaped recovery”.

In April 2020, the Observer Research Foundation (ORF) and the Esya Centre organised a roundtable to identify the M&E sector’s challenges, emergent trends, and potential pathways to recovery. The discussion was framed using the triad of (a) policy and regulatory environment; (b) future of work and of production; and (c) the imperative of value preservation, with a focus on achieving consensus on remedial action. The key government ministries and regulators that were discussed include the Ministry of Information and Broadcasting (MIB), which plays a central role in the M&E sector. Other relevant nodes include the Ministry of Finance, the Reserve Bank of India (RBI), and the Telecom Regulatory Authority of India (TRAI).

This special report builds on the insights shared during the ORF-Esya Centre roundtable. The following were the key themes that emerged from the discussion:

i. The M&E sector must offset growth slowdown through investments in production efficiency, human capital, and innovation.

ii. The Government must provide a level playing field to functionally similar industries, by deregulating traditional industries like TV, radio, and print, and allow them to compete with digital counterparts through value for money services, product differentiation, enhancements in consumer experience, and choice.

iii. The Government must enable digital transformation by increasing economic freedom for traditional M&E businesses to operate, and by easing digital payment frictions and promoting their wide adoption. In addition, the Government must nudge traditional industries towards better quality of service for its own sustenance.

iv. A focus on M&E exports can be leveraged to offset contraction and reallocation in domestic consumer spends. This requires a strategic approach and public-private collaboration to increase export competitiveness. Lessons can be learned from best practices from other jurisdictions.

v. Economic crises lead to a decline in margins across all rungs of the supply chain, and Micro Small and Medium Enterprises (MSMEs) in M&E will be most affected. Consequently, there is a need for industry and government to collaborate in mapping and targeting MSMEs with capacity-building measures to improve firm productivity.

vi. Cable TV households represent low-hanging fruits in terms of expanding high-quality broadband connections. They also represent addressable demand for video content – which accounts for a large share of broadband consumption globally. Resource sharing, and simpler right of way regimes are required.

Attribution: Vivan Sharan and Laetitia Warjri. “COVID-19 and India’s Media and Entertainment Sector: Recommendations for Recovery,” Special Report No. 109, June 2020, Observer Research Foundation and Esya Centre.