Digital India Act To Be A Game Changer To Trigger Innovation

India has set an ambitious goal of becoming a trillion-dollar digital economy within the next few years. To accomplish this, the country has rightly prioritized digital growth in areas such as connectivity, Management Information Systems (MIS), transitioning to a cashless economy for government-to-person (G2P) transactions, fostering the growth of payment systems, e-commerce, e-gaming, ed-tech products, and other emerging sectors. However, to expedite this progress, India must effectively utilize its resources by establishing a stable and favourable business environment and placing the digital economy at the forefront of its growth narrative.

In line with this, the proposed Digital India Act emerges as a timely initiative, guided by the principle of "less government and more governance." In today's rapidly evolving digital world, where innovations emerge at an accelerated pace, it is crucial to embrace industry-driven solutions. The ongoing transformation of India's digital landscape presents a significant opportunity, and the forthcoming Digital India Act aims to not only enable but also reform this transformation.

With its focus on regulating and streamlining digital markets, the draft legislation seeks to ensure a secure and empowered digital environment for Indian citizens. The government's commendable approach of educating the industry about the Act's provisions and intentions through a participatory process is praiseworthy. This inclusive approach holds the potential to shape an Act that is forward-looking, facilitative, and aligns with the needs of the evolving digital ecosystem.

The rapid growth of the digital economy in India has exposed various challenges within the existing legal framework. The Information Technology Act, 2000, has become outdated and is unable to address the complexities of the modern digital ecosystem. Moreover, the rapid growth of the digital ecosystem of the country has raised concerns about data privacy, security, and the need for more facilitatory regulations to protect citizens’ interests.

The Digital India Act aims to resolve these issues by putting forward guidelines that will regulate and ensure a more transparent and secure digital environment. The Act will address social media, online gaming, cyberbullying, e-commerce, artificial intelligence, and internet platforms, thereby providing an expansive legal framework for the country's digital ecosystem. The ambitious Act could also become the country’s base document for any tech legislations in near future.

The goal of the new Digital India Act, according to the Minister of State for Electronics and Information Technology, Rajeev Chandrasekhar, is to “act as catalysts for Indian economy by enabling more innovation, more start-ups, and at the same time protecting the citizens of India in terms of safety, trust, and accountability.” The industry appreciates the government's inclusive approach in law-making, which stands in contrast to the recently imposed anti-tobacco health warning guidelines for OTT platforms which were passed arbitrarily and without industry consultations, posing implementation challenges for the industry.

The Digital India Act introduces different classifications for intermediaries and proposes separate regulations for each category. While it was expected to have new categorizations due to rapid technological advancements, the government is still deliberating on whether all intermediaries should receive "safe harbour" protection. Safe harbour is a legal provision that shields online intermediaries, like e-commerce platforms and social media networks, from liability for user actions. This means that platforms such as ONDC, Amazon, and Flipkart are not held responsible for counterfeit or illegal products sold by third-party sellers on their websites, as long as they have mechanisms for addressing grievances, refund/return/replacement policies, and promptly remove infringing content upon notice. The safe harbour principle has been crucial for the growth of the e-commerce sector. Intermediaries in e-commerce and e-gaming are merely platforms and should be treated accordingly. The establishment of Self-Regulatory Organizations (SROs) to oversee peer group compliance is a positive step. The SRO should consist of stakeholders, with a third-party appellate body appointed by the SROs and the government to ensure strict adherence to agreed-upon parameters and take legal action when necessary.

There is ambiguity regarding whether the Digital India Act aims to eliminate safe harbour protection for all intermediaries or solely for social media platforms. The government has already exerted some control over safe harbour for social media platforms through regulations like the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. These rules mandate the removal of posts upon government orders or legal requirements. Regulating different categories of intermediaries separately will bring clarity, as each type requires a distinct approach.

The Digital India Act has the potential to revolutionize the country's digital landscape. However, its compatibility with other digital regulations remains to be seen. The government's consultative approach to this Act is commendable. Policymakers must continue to formulate regulations with a consultative approach to foster growth, and innovation, and safeguard the interests of consumers and businesses. By striking a balance, India can fully leverage its potential and solidify its position as a global digital powerhouse, advancing towards a trillion-dollar digital economy.

Practitioner Development Economist and Ex-Secretary, GoI