NASSCOM : Public Policy | Volume 3 | Issue 02

Union Budget 2022-23

The Union Budget, 2022-23 (Budget) lays a strong thrust on leveraging technology as an enabler, by announcing a range of initiatives that could make India a digital nation. Some of the highlights of budget include infrastructure status to data centres, promotion of animation, visual effects, gaming and comic; extension of income tax holiday for start-ups and reduction in tax rates for High-Net-worth Individuals (HNIs) (Income above INR 2 crore) by capping Long Term Capital Gain (LTCG) tax surcharge, setting up centre for processing accelerated corporate exit and use of drones in agriculture. On 3 February 2022, NASSCOM conducted an interactive panel discussion on the impact of the Union Budget on the Indian economy and the technology industry. Recording of the discussion is available here.

NASSCOM will be submitting a detailed post budget memorandum highlighting concerns and recommendations to strengthen the budget proposals. Kindly share your inputs before February 11, 2022 to Tejasvi@nasscom.in and jayakumar@nasscom.in

Economic Survey 2021-22

The Survey was tabled in the Parliament on January 31, 2022 by Finance Minister. It highlighted that India would grow at 9.2% in the current fiscal year. The gross tax revenue between April to November, 2021 has registered a growth of over 50 per cent in Year over Year (YoY) terms, indicating a strong revival of the economy. The Survey highlighted the positive impact on ease of doing business on account of the reforms to the telecom Other Service Provider (OSP) guidelines.

Cross Border Data: Suggestions to the European Data Protection Board for a risk based evaluation of remote access of data under the GDPR

We have made a submission to the European Data Protection Board on 31st January 2022 requesting them to nuance the interpretation of the concept of transfer under the GDPR. As part of our submission, we have requested the EDPB to treat remote access of personal data located in the EU as a low-risk activity and examine the regulatory requirement accordingly. For more information, write to varun@nasscom.in

Labour Reforms: Submission on Maharashtra Industrial Relations (IR) Rules

On January 17, we submitted our response on the Draft Maharashtra Industrial Relations (IR) Rules. We have suggested that the Rules should provide flexibility to establishments with existing well-established mechanisms in place towards maintaining amity between the employer and the employee from setting up Grievance Redressal Mechanism and Work Committee. The Rules should also enable employers to notify changes in the working conditions in an electronic medium instead of mandating establishments to publish such changes in physical form. For more information, write to deepak@nasscom.in.

GST: Representation seeking clarification on taxability of gift cards/ gift vouchers

The Karnataka Appellate Authority for Advance Ruling (AAAR) has held that supply of vouchers, in the hands of the dealer who purchases and sells vouchers, is supply of goods chargeable to GST @ 18%. Similarly, in relation to "breakages", in another ruling, it was held that value of payback points forfeited on account of failure to redeem them within their validity period (breakage) by the end customers, would amount to consideration for services provided to its clients and would thus be chargeable to GST. This is contrary to the widely accepted position both in the previous Service Tax / Value Added Tax (VAT) regime as well as the present GST regime. We have requested the authorities to issue clarification that gift cards / vouchers are neither "goods" nor "services" and a "supply" involving gift cards or vouchers shall attract GST only at their stage of redemption. Further, breakage should not attract GST

TRAI: Submission on licensing framework for private 5G network

In our response to the consultation paper on "Auction of Spectrum in frequency bands identified for IMT/5G", we have provided feedback on the merits of various licensing approaches proposed by Telecom Regulatory Authority of India (TRAI) for Non-Public Networks (NPN) deployment. We have recommended that Government should consider earmarking dedicated spectrum for captive purposes and allow entities to directly obtain license towards greater control and spectrum management. The TRAI paper deals with specific issues related to the allocation of spectrum bands for International Mobile Telecommunications (IMT)/5G including licensing framework for private 5G network.

Card on File Tokenisation: Submission to FinTech Department, RBI and NASSCOM-RBI interaction on CoFT

In a discussion with the newly created FinTech Department of the RBI, we have highlighted the concerns of the eCommerce, Software as a Service (SaaS), online sellers and payment aggregators (PAs). The need for the RBI regulated entities (REs) to be ready before the user industry can be compliant has been emphasised. We have also suggested that a dashboard may be published regularly on the RBI's website to serve as a single and credible source of information on the compliance progress for the entire ecosystem. On the basis of this representation, we organised an interaction for merchants and payment aggregators to discuss their concerns and questions with the RBI on January 31, 2022. It was suggested that RBI-led consumer awareness campaigns be organised and that there must be transparency around readiness of regulated entities. RBI took a note of concerns and questions raised by participants.

Department of Consumer Affairs: Consumer Protection e-Commerce Rules

We participated in a stakeholder consultation chaired by the Secretary, Department of Consumer Affairs (DoCA), Ministry of Consumer Affairs, Food and Public Distribution on the review of the Consumer Protection (e-Commerce) Rules, 2020. We emphasised that (1) consumer protection rules should focus on consumer protection issues and avoid overlaps with the FDI policy and the Competition Act; (2) obligations should be proportionate to the risk and should consider the uniqueness of different e-commerce models; (3) the rules should not prohibit or disincentivise legitimate business models; and (4) the rules should be unambiguous. For more information, write to garima@nasscom.in.

Attracting more Tech-SMEs and Start-ups in Madhya Pradesh

In an interaction with the Information Technology Minister of Government of Madhya Pradesh (MP), we discussed ideas to attract more tech start-ups and small and medium enterprises (SMEs) to the State. Our suggestions focussed on making MP a preferred destination for start-ups, development of the Engineering Research & Development (ER&D) industry, leveraging the Business Process Management (BPM) industry in Indore and Bhopal and promoting MP as a preferred state for digital trade.

MEITY and MEA: Seeking clarity on certain terms of Category 5 Part 2 of the Wassenaar Arrangement List of Dual Use Goods and Technologies

We discussed with the Ministry of Electronics and Information Technology (MeitY) and the Ministry of External Affairs (MEA), industry's proposal to seek clarity in the meaning of the terms 'primary function' and 'non-primary function' under Category 5 Part 2 of the Wassenaar Arrangement List of Dual Use Goods and Technologies. We also submitted suggestions for issuing guidelines for the industry to assess what constitutes 'of potential interest to a wide range of individuals and businesses' under the cryptography note. This is in furtherance of addressing the challenges that the industry faces in appropriately classifying and seeking export licence for items that entail information security functionality. For more information, write to garima@nasscom.in.

Discussion with SEBI for easing provisions related to buyback of own securities

On January 20, we met the Securities and Exchange Board of India (SEBI) sub-group, comprising members of the Primary Market Advisory Committee (PMAC), constituted under the chairmanship of Shri K.K. Mistry (Vice Chairman and CEO of HDFC) to review the extant provisions under the SEBI (Buy-Back of Securities) Regulations, 2018 and the Companies Act, 2013. We highlighted the importance of buyback of shares for the company as well as the shareholders and the need to liberalise the provisions governing buyback of shares. Specifically, we have requested SEBI to reduce the time gap between two buybacks from 1 year to 6 months, increase the maximum quantum of buyback beyond 25%, amongst other suggestions.

Knowledge Session: SOFTEX and Inward Remittances

On the basis of concerns and queries related to SOFTEX and Inward Remittances, we organised a webinar on January 19 for our small and medium enterprises (SMEs). The session witnessed a participation of over 300 participants and was engaging and insightful. The session had STPI and other consultants as speakers to address member queries on SOFTEX and inward remittances.

Building code for Data Centers: First meeting of the Working Group

We participated in the first meeting of the Working group (WG) for Creation of Building Code for the Data Centre. NASSCOM has been advocating the need for this. Various government agencies including MeitY, Bureau of India standards (BIS), Ministry of Housing and Urban affairs (MoHUA) and some industry bodies participated in the meeting. MoHUA and BIS have been advised to propose suitable changes to the current norms and specifications to accommodate the industry needs. We suggested that these recommendations should be taken to the industry for feedback before finalisation. Going forward, the state governments will be also engaged with to evolve a mechanism that can work across states. For more information, write to jayakumar@nasscom.in .

National Single Window System: Interaction with DPIIT

A meeting was organised by DPIIT on January 28, 2022, to get the industry feedback and to discuss the way forward on the National Single Window System (NSWS). This is a business portal that will allow investors to identify, apply and obtain various pre-operations approvals required for setting up a business unit in India. It was soft launched in September 2021. In the meeting, we have requested that all relevant approvals for IT-BPM unit and Data Centers be packaged based on use case, and IT-BPM industry be included as a separate category in the Know Your Approvals (KYA) module. For more information, write to jayakumar@nasscom.in

Assessing the impact of UK-India FTA on digital trade

As part of our engagement with the industry and the government in both India and UK for the upcoming India-UK Free Trade Agreement (FTA), we are seeking inputs from the industry on the following: (1) top priorities for a future trade deal between India and UK, especially pertaining to digital trade; (2) challenges being faced while trading with the UK; (3) recommendations for improving digital trade between India and the UK, and (4) estimated impact of India-UK trade deal on the industry. We are gathering inputs via a survey and interviews, as appropriate. The survey can be accessed here. For more information, write to garima@nasscom.in.

Call for inputs: Gujarat OSH Rules

The Gujarat Occupational Safety, Health and Working Conditions Rules, 2021 prescribes for the procedure for registration of an establishment, format for issuance of appointment letter, conditions for employment of women in night shift, procedure for engagement of contract labour etc. Industry has been requested to share inputs with deepak@nasscom.in by February 10, 2022.

Call for inputs: India Digital Ecosystem Architecture 2.0

MEITY has released the draft India Digital Ecosystem Architecture 2.0 (InDEA 2.0) for consultation. InDEA 2.0 builds upon the principles and models recommended in India Enterprise Architecture (IndEA 1.0 - 2018) and adopts a significantly different approach to architecture development by shifting the focus from the architectural needs of an enterprise to that of an ecosystem. The deadline to share feedback to MeitY is February 27, 2022. Industry has been requested share inputs to jayakumar@nasscom.in and apurva@nasscom.in by February 18, 2022.

Update on Haryana Private Reservation Law

The Government of Haryana on January 10, 2022, notified the Haryana State Employment of Local Candidates Rules, 2021 (Rules), towards implementation of Haryana State Employment of Local Candidates Act , 2020 (Act), that mandates private establishments employing more than 10 or more people in the State to reserve 75% of the jobs with Wages up to INR 30,000 (as notified under Section 4) for the local candidates. The Rules prescribes for the process of registration of employees by the employers on the designated portal; procedure to seek exemption from the requirement of hiring local candidates including requirement to file quarterly filing amongst other requirements.

In a separate order, the Haryana labour department exempted certain categories of vacancies and establishments including new Start-ups and IT-ITeS units from the purview of the Act for the period of two years.

RBI: Framework for facilitating 'Small Value Digital Payments'

The RBI released the framework for facilitating small value digital payments in offline mode. The Framework defines "offline payments" as transactions which do not require internet or telecom connectivity to take effect. Key features of the framework include offline payments may be made using any channel or instrument like cards, wallets, mobile devices, etc. and may be offered without Additional Factor of Authentication (AFA). The upper limit of an offline payment transaction is INR 200 and the total limit for offline transactions on a payment instrument at any point is INR 2000.

UK Government: Setting up of an International Data Transfers Expert Council

The UK Government has set up a government council on international data transfers to provide the government with independent advice on the way forward on free and secure international data transfers under UK law post-Brexit. The council includes representatives from global technology companies, industry associations, law firms, universities, and policy organizations, such as the Future of Privacy Forum and the World Economic Forum. Its scope of work covers the development of new data transfer tools, future data adequacy partnerships, and how governments can promote trust in sharing personal data for law enforcement and national security purposes. For more information, write to varun@nasscom.in.

UK Information Commissioner's Office: Laying of new International Data Transfer Agreement in Parliament

In October 2021, NASSCOM had made a submission to the data protection regulator of the UK Government, the Information Commissioner's Office (ICO), on its consultation paper proposing a new transfer tool for data transfers under UK data protection law. Pursuant to that consultation, the UK Government has now laid that transfer tool, called the International Data Transfer Agreement (IDTA), before Parliament. The IDTA will be used by parties transferring personal data outside the UK. In the event it is given parliamentary approval, the IDTA will come into force on 21st March 2022. For more information, write to varun@nasscom.in.

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