India must keep its OTT policy independence

Pralok Gupta/Anshu Bhardwaj | Updated on March 18, 2021

The new rules are a welcome step   -  Getty Images

The new rules on e-comm and digital economy being discussed at the WTO aim to curtail the power of governments to regulate

The government recently notified the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. These are intended to regulate the online content of social media platforms like Twitter, Facebook, WhatsApp and over-the-top (OTT) platforms such as Netflix, Amazon Prime, YouTube, and so on. These rules are much needed as there were rising concerns over the content on these platforms and, hence, it is a welcome step taken by the government.

The rules include a three-tier grievance redress mechanism. The first will be at the level of each OTT provider, the second level consists of a self-regulatory body with censoring powers if the issue is not addressed at the first level, and the third level relates to overriding powers in the form of oversight mechanism to be performed by an inter-ministerial committee. Through these new rules, streaming services and digital news media have now come under the purview of the IT Act and the government has emergency powers to block public access of any information.

Though these rules are intended to regulate digital media, they also need to be understood from the WTO perspective. The existing obligations of the WTO as well as the currently discussed e-commerce rules among selected WTO members have significant implications for digital economy regulations.

Existing rules

As far as the existing rules of the WTO are concerned, given most of the activities of the digital media companies are of the nature of audio-visual services, they will come under the purview of the General Agreement on Trade in Services (GATS) of the WTO. The GATS recognises the right of WTO members to regulate and to introduce new regulations within their territories in order to meet national policy objective. However, these regulations must be non-discriminatory and administered in a reasonable, objective and impartial manner. These are called domestic regulations under the GATS.

Since, the newly notified rules are applicable for all digital media players and do not discriminate between domestic and foreign service providers, these will fall under the category of domestic regulations. Hence, India is well within its right under the WTO to introduce these regulations.

It could also be noted that India has not made any commitments in the audio-visual services, except for motion picture or video tape distribution services, in the WTO. Even for these, India has not made any national treatment commitments for cross-border supply of such services. It implies that India can put any discriminatory regulations on these services. Therefore, even if any provision in these rules is discriminatory, it does not violate India’s commitments under the GATS.

Thus, India’s newly notified rules pertaining to digital media are compatible with India’s obligations under the WTO’s existing rules. However, this may not be the case if the new rules pertaining to e-commerce and digital economy, being discussed among selected WTO members and called Joint Statement Initiative (JSI), come into existence. Therefore, it is more important to look into the policy option exercised by the government to regulate its digital media from the perspective of these JSI rules.

This JSI on e-commerce has provisions which aim to curtail the power available to the governments for regulating the digital, economy. Free cross-border flow of data, prohibition on data localisation, no access to source code, non-discriminatory treatment of digital products, etc., are a few provisions that curtail significant policy space of the government. As the digital economy is evolving in India, no one knows what is in store and what kind of regulations may be required to ensure sustainable growth and balance among various segments of the digital economy in future.

Digital media regulations notified by the government are a prime example of this. Before the lockdown, OTT platforms had marginal presence in India and hence not much attention was given to the content shown on these platforms. However, during and after the lockdown, there has been an exponential growth in the penetration of OTT platforms in India. Since new movies were not released in cinema halls during the lockdown, the OTT platforms served as a good alternative source of entertainment to Indian viewers. Various controversies and issues related with adult content, violence, abusive language, picturisation of religious places, etc. soon made the policymakers realise that there is a need to regulate the content shown on digital media. Had the newly discussed JSI rules been in place, India may not have been able to introduce these regulations.

Therefore, it is important for India to keep its policy options open and not be a part of these e-commerce JSI discussions. As the digital economy is in a nascent stage in most developing countries, India may also like to sensitise other WTO members about the need for keeping the policy space open for regulating the digital economy. It may like to lead from the front by showcasing its own example of the need to regulate digital media to illustrate the evolving nature of the digital economy and the adverse effects that JSI provisions could have on the policy-making powers of the governments.

Gupta is Associate Professor at Centre for WTO Studies, IIFT, New Delhi, and Bhardwaj is Skill Associate Professor at Shri Vishwakarma Skill University, Gurugram

Published on March 18, 2021

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