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#NAMA: Problems with local incorporation; need for transparency, accountability and recourse for users

“The requirement of local incorporation in the draft Intermediary Guidelines might eventually hurt Indian startups operating elsewhere, because local incorporation is something that other countries would love to replicate,” said Prasanto K Roy, an independent tech policy and media professional. “It is about retaliation versus inspiration. Lot of countries, especially in the Asia Pacific region, are looking at India and what we are doing,” he said. Roy was speaking at MediaNama’s discussion on Intermediary Liability in Delhi on October 23, conducted in partnership with CCG-NLU Delhi, with support from Google, Facebook, and the Friedrich Naumann Foundation.

“Local incorporation does not factor in the diversity of the internet, the kind of services we use, which are delivered by very, very lean teams such as Wikipedia.” – Prasanto K Roy

In the payments space, the government has mandated localisation because it needs a throat to choke, Roy said. “The government can not expect all the companies that it is dealing with to have an office in the country, it has to also keep in mind its bilateral trade agreements with other countries,” he added.

Prasanto K Roy, independent tech policy and media professional

The Personal Data Protection Bill requires entities that process data of Indian citizens to have a data protection officer in India, the GDPR already does this in Europe, so that companies don’t need have to have a legal office in the country in order to be held liable, said Mozilla’s Udbhav Tiwari. The government can look at alternatives to mandating local incorporation such as having a nodal officer or a grievance officer, Tiwari added.

The draft Intermediary Guidelines mandates companies with more than 50 lakh users to have a local registered office in India, but according to Tiwari, that is an arbitrary number. “Saying 50 lakh users clearly underestimates how many people use the internet in India and what they use it for. It’s not like 1 crore is better than 50 lakh or 2 crore is better than 1 crore and I don’t think we should get into that discussion,” Tiwari added.

Aman Taneja of Ikigai Law, said that having a nodal officer is a better solution than asking for local incorporation for the purposes under the intermediary guidelines. However, if the government wants local incorporation for purposes of taxation or something else, then it should not be in the purview of the draft Intermediary Guidelines, Taneja added. “The localisation requirement stems for two basic reasons: control over data and taxation,” said Pavit Singh Katoch of Shardul Amarchand Mangaldas.

“The main reason to have a local entity in India is so that the government can control the data, and it can just go to the place where the server is located and get access to it.” – Pavit Singh Katoch

Transparency, accountability and recourse for users

Whether it’s court officers or enforcing officials who are trying to trace instances of alleged violations, until there’s a standard of accountability, we are not going to get anywhere, said Abhishek Malhotra of TMT Law Practise. “This accountability ought to go back to a set of standards that ought to be followed, so that you can measure whether a decision was correct or not,” he added.

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“I take it that there needs to be an oversight committee, I take it that, perhaps if it has a judicial member, there is a greater likelihood that it would be judicially interpreted and implemented. However, we should also ask for accountability.” – Abhishek Malhotra

“Automated filters being mandated under law is a reality now and tech companies need to tell us what technology they’re using, what kind of content they are actively taking down,” said Shashank Mohan of SFLC.in, calling for transparency from intermediaries. He said that while these companies have already started doing some of it in their transparency reports, “they need to go much, much further than that, and reveal things like what technology they are using, how does it determine what is to be taken down, what is not to be taken down”.

Shashank Mohan, SFLC.in

Mohan also said that transparency should be tied to recourse for users as well. “A transparency situation where there is a recourse for the user to file a complaint. Facebook is doing that with its Oversight Board, but from an industry wide perspective, there needs to be recourse for the user as well,” he added.

Read our coverage of the discussion here: 

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