Pathways to Higher Education

Presentation at Global Digital Humanities Symposium

sneha-pp — 2019-05-03T09:41:53Z

P.P. Sneha gave a virtual presentation of her work on digital cultural archives at the Global Digital Humanities Symposium organised by Michigan State University on March 21-22, 2019.

Puthiya Purayil Sneha (Centre for Internet and Society, Bangalore, India)

The archive has been an important context for conversations around digital humanities (DH) in India, as it has been globally. The last few decades have seen several large-scale efforts in digitalization across various sectors, including state institutions (National Museum, National Cultural Audio-Visual Archive (IGNCA)) universities (Jadavpur University, Ambedkar University,) and individual and collaborative efforts (Indian Memory Project, Indiancine.ma ) to name a few. The emergence of new fields like DH, digital cultures and cultural analytics also indicate several shifts in scholarship, pedagogy and practice, on the one hand alluding to the potential offered by democratizing technologies, but also reflecting persistent challenges related to the digital divide, and more specifically politics around the growth and sustenance of the humanities disciplines.

The growth of new areas of study and creative practice like DH has brought about a renewed focus on the creation of digital corpora, and the need for new technologies and methods of research, more specifically through the development of digital pedagogies. The contexts of these questions are however much wider, located in long-spanning efforts in digitization and digital literacy more broadly, which are still fraught with challenges of access, usage and context. Even as the colonial imagination of state archives remains prevalent in India, digital archival initiatives facilitated by infrastructure such as open source content management systems and tools like web annotation have opened up spaces for alternate narratives. Drawing upon excerpts from a report on mapping the field of DH in India, and ongoing conversations on the digital transition in archival practices, this presentation seeks to understand the politics of digital archiving in a postcolonial context, and how it informs larger trajectories of digitalisation, and the growth of fields like DH in India today.

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Practicing Feminist Principles

ambika — 2021-12-07T00:54:54Z

AI can serve to challenge social inequality and dismantle structures of power.

Artificial intelligence systems have been heralded as a tool to purge our systems of social biases, opinions, and behaviour, and produce ‘hard objectivity’. However, on the contrary, it has become evident that AI systems can sharpen inequalities and bias by hard coding it. If left unattended, automated decision-making can be dangerous and dystopian.

However, when appropriated by feminists, AI can serve to challenge social inequality and dismantle structures of power. There are many routes to such appropriation – resisting authoritarian uses through movement-building and creating our own alternative systems that harness the strength of AI towards achieving social change.

Feminist principles can be a handy framework to understand and transform the impact of AI systems. Key principles include reflexivity, participation, intersectionality, and working towards structural change. When operationalised, these principles can be used to enhance the capacities of local actors and institutions working towards developmental goals. They can also be used to theoretically ground collective action against the use of AI systems by institutions of power.

Reflexivity in the design and implementation of AI would imply a check on the privilege and power, or lack thereof, of the various stakeholders involved in an ecosystem. By being reflexive, designers can take steps to account for power hierarchies in the process of design. A popular example of the impact of power differentials is in national statistics. Collected largely by male surveyors speaking to male heads of households, national statistics can often undervalue or misrepresent women’s labour and health. See Data2x. “Gender Data: Sources, Gaps, and Measurement Opportunities,” March 2017 and Statistics Division. “Gender, Statistics and Gender Indicators Developing a Regional Core Set of Gender Statistics and Indicators in Asia and the Pacific.” United Nations Economic and Social Commission for Asia and the Pacific, 2013. AI systems would need to be reflexive of such gaps and plan steps to mitigate them.

Participation as a principle focuses on the process. A participatory process would account for the perspectives and lived experiences of various stakeholders, including those most impacted by its deployment. In the health ecosystem, for instance, this would include policymakers, public and private healthcare providers, frontline workers, and patients. A health information system with a bottom-up design would account for metrics of success determined by not just high-level organisations such as the World Health Organisation and national governments, but also by providers and frontline workers. Among other benefits, participation in designing AI systems also leads to buy-in and ownership of the technology right at the outset, promoting widespread adoption.

Intersectionality calls for addressing the social difference in the datasets, design, and deployment of AI. Research across fields has shown the perpetuation of inequality based on gender, income, race, and other characteristics through AI that is based on biased datasets.

The most critical principle is to ensure that AI systems are working to challenge inequality, including inequality perpetrated by patriarchal, racist, and capitalist systems. Aligning with feminist objectives means that systems that have objectives that do not align with feminist goals – such as those that enhance state capacities to surveil and police – would immediately be excluded. Systems that are designed to exclude and oppress will not work to further feminist goals, even if they integrate other progressive elements such as intersectional datasets or dynamic consent architecture (which would allow users to opt in and out easily).

We must work towards decreasing social inequality and achieve egalitarian outcomes in and through its practice. Thus, while explicitly feminist projects such as those that produce better datasets or advocate for participatory mechanisms are of course practicing this principle, I would argue that it is also practiced by any project that furthers feminist goals. Take for example AI projects that aim to reduce hate speech and misinformation online. Given that women and other marginalised groups are often at the receiving end of violence, such work can be classified as feminist even if it doesn’t actively target gender-based violence.

All technology is embedded in social relations. Practicing feminist principles in the design of AI only serves to account for these social relations and design better, more robust systems. Feminist practitioners can mobilise these to ensure a future of AI with inclusive, community-owned, participatory systems, combined with collective challenges to systems of domination.

References

Haraway, Donna. “Situated Knowledges: The Science Question in Feminism and the Privilege of Partial Perspective.” Feminist Studies 14, no. 3 (1988): 575–99. https://doi.org/10.2307/3178066.

Link to the original article here

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Porn: Law, Video, Technology

Namita A Malhotra — 2015-04-14T12:43:14Z

Namita Malhotra’s monograph on Pornography and Pleasure is possibly the first Indian reflection and review of its kind. It draws aside the purdah that pornography has become – the forbidden object as well as the thing that prevents you from looking at it – and fingers its constituent threads and textures.

This monograph is not so much about a cultural product called porn as it is a meditation on visuality and seeing, the construction and experience of gazing, technology and bodies in the law, modern myths, the interactions between human and filmic bodies. And technology not necessarily as objects and devices that make pornography possible (but that too), but as history and evolution, process and method, and what this brings to understanding what pornography is.

Namita’s approach brings film studies, technology studies, critical theory, philosophy, literature and legal studies into a document that reads as part literature review, part analysis, going deep, as a monograph should. Reading through this I was struck by the ways of seeing and writing, that a subject like pornography demands – and allows for. I found the structure of the entire piece well conceived, akin to 3D models of spirals rather than linear, much like the experience of watching itself, perhaps. Personally, I know I’m going to keep going back to this monograph for its rich references as much as for how Malhotra examines visual (con)texts across multiple disciplines. And, far from being a distant academic paper, I see how Namita has worked in and been informed by her own fond appreciation of diverse texts with useful and unusual departures into literature and philosophy.

The emphasis on amateur pornography is critical considering the pandemic of hysterical blindness that afflicts public conversations in India around this phenomenon in particular, and the Obscene more generally. A line from the monograph ‘pornography does ideological work’ stands out for me, as Namita shows how it (the monograph, amateur porn, pornography) effectively slices through the careful fabrications called Nation, Culture and Justice in particular; and also in terms of how porn constitutes particular kinds of knowing, speech and experience that reflect on the status quo of politics and of seeing/visuality. The deep engagement with the Mysore Mallige movie/case is an interesting and tender one, perhaps one of the first such in-depth analyses, and a great example of how amateur porn works and what it means.

Considering the appalling lack of insight in responding to the Obscene and the Pornographic, the messy rhetoric and outrage that result when the Pornographic is made public, when the law acts on the visual, on technology, Namita’s analysis is a sharp lens that provides much-needed rejoinders. The sections dealing with these kinds of past events – the moment of public outrage around the revelation of a piece of porn, it’s journey of creation and circulation, the public and institutional esponses to it, are really excellent analyses of a particular kind of moment in contemporary Indian society that have become (to my mind) increasingly difficult to talk about.

There can only be more sharing of this document, perhaps re-purposed, in parts, to become more accessible to communities engaged with commenting, acting and responding to the Obscene, the Visual and the Law (I say this from a perspective of utility and instrumentality that “activism” necessarily deploys, but within what is possible for cannibalisation. Also, because people don’t read) because there just isn’t enough thoughtful work on pornography in the current climate.

The monograph moves to examining the ‘being’ of the pornographic artifact as a digital image and how and why it, especially “video pornography provides a new model for relating to the mass-produced, one in which the body’s susceptibility constitutes both a yielding and a resistance to the hypnotic seduction of the image.”

I find this quote tantalising for it offers a critical perspective on pornography as a challenging politics rather than as ‘merely’ text, which is what this monograph attempts to do. To take this further and to explore the response between the visual and the human, the “something that takes place between the text and the person watching”, could be to move towards reception studies and studies of the experiencing of porn either as star/creator, fan or audience. There are fascinating possibilities here for inventive methodologies and formats in which this could be done, montage-ing academic text with visual ethnographies, online aggregation and collation of visual data and experiences, and so on. This next stage could be exciting in how it could really engage with the body of porn and its people.

Introduction by Maya Ganesh

Download the monograph here [PDF, 3.73 MB]

For more details visit https://cis-india.org/raw/histories-of-the-internet/porn-law-video-technology

Policy Shaping in the Indian IT Industry: Recommendations by NASSCOM, 2006-2012

Pavishka Mittal — 2016-07-04T08:11:05Z

This is the first of a series of three blog posts, authored by Pavishka Mittal, tracking the engagements by NASSCOM and iSPIRT in suggesting and shaping the IT industry policies in India during 2006-2016. This posts focuses on the policy activities of NASSCOM in 2006-2012 with specific reference to Special Economic Zones, E-Commerce Industry and Transfer Pricing, along with a few other miscellaneous important recommendations.

1. Introduction

2. Tax Reforms in Special Economic Zones (SEZs)

3. E-Commerce Industry

4. Transfer Pricing Issues

5. Other Recommendations

5.1. Concerns with the Union Budget Proposals

5.2. Request for Clarity in Classification of Transactions and Guidelines

5.3. New Retrograde Obligations under Law

6. Endnotes

7. Author Profile

1. Introduction

The National Association of Software and Services Companies (NASSCOM) was established in 1988 as a non-profit, global trade association registered under the Indian Societies Act 1860 representing the interests of the IT Industry, now with over 1500 members. Its objective is to facilitate trade in the software development and services, software products, IT enabled/BPO services and e-commerce. It also undertakes research projects for facilitating innovation in advanced software and maintains data on industry trends, even a national database of registered and verified knowledge workers in the industry. Nevertheless, its role of policy advocacy cannot be over emphasized. It regularly interacts with the Government of India to bring about a favourable business environment for the IT Industry.

This blog post, the first part in a series, discusses NASSCOM’s major issues with policies of the Government of India in the period 2006-2012. The concerns of the IT industry, as highlighted by NASSCOM in the period aforementioned are with reference to the Special Economic Zones, E-Commerce Industry and Transfer Pricing broadly along with other miscellaneous important recommendations. The subsequent blog posts will focus on specific tax issues post 2012 and will elaborately discuss transfer pricing related concerns.

2. Tax Reforms in Special Economic Zones (SEZs)

The ITes and BPO industry constitutes a sizable portion of the number of SEZs in the country [1] so much so that it has been argued that the IT industry alone reaps the benefits of the SEZs and STPIs to the exclusion of the other sectors [2].

The most salient incentive in the SEZ Act enacted by the Government of India in 2005 had been income tax exemption of export profits which contributed to the scheme’s success in attracting major investments [3]. Further, exemption from minimum alternate tax had been provided under section 115JB of the Income Tax Act. However, in 2011, the government decided to impose a Minimum Alternate Tax upto the rate of 18.5% on the book profits of SEZ’s developers and units through the Finance Act 2012 by introducing amendments to the Income Tax Act 1961, to be effective from April 2012 [4]. NASSCOM took a strong stance against equality in corporate tax liability as such tax is sought to be imposed upon income derived from investments made with a commitment of tax exemption. The intention of the government in making such policies having regressive outcomes will be judged if key promised characteristics of SEZs were differential economic laws from the remaining domestic territory. For all practical purposes, they are deemed to be foreign territories for the levy of trade duties and tariffs [5]. In the case of Mindtree Limited v. Union of India [6], software company Mindtree argued that the imposition of MAT in SEZs was against the concept of promissory estoppel and the doctrine of legitimate expectation, which rendered such taxes constitutionally invalid [7]. Even though a time limit was not prescribed for the above tax exemption, it was argued that SEZ policy was predicated on tax relief and the subsequent change in policy was arbitrary and unfair. Individual taxpayers and undertakings should not be affected by subsequent laws if they make sizable investments, modify business models and bear the added expenses of moving into or developing a SEZ. It cannot be disputed that this argument is untenable keeping in mind that the legislature cannot be bound by past promises in line with practical considerations and their independence with regard to the effective discharge of public functions. It was held that the legislature cannot be bound by the doctrine of promissory estoppel [8].

The Adani group had also challenged the imposition of MAT in the Gujarat HC in 2011 on the ground that that any amendments to the SEZ Act can only be brought about by amendments to the SEZ Act itself, and not through the Finance Act [9]. The SC in Madurai District Central Cooperative Bank Ltd. [10] held that the parliament has the authority to introduce a new charge of tax even by incorporating it in any other statute other than the act. However, the fact remains that such policies lead to a volatile business environment and the importance of stable business policies cannot be overemphasized. In 2011, NASSCOM recommended that MAT be withdrawn as it is opposed to the government’s long term policy of SEZ’s growth [11]. Alternatively, it stated that the imposition of MAT be withdrawn to ensure the continued economic viability of the SEZs which have already been notified by the government [12]. It also stated that international norms should be applied for the determination of the MAT rate, which was 1/3rd of the corporate tax rates [13].

Another concern highlighted by other stakeholders was the prescribed period of ten years for the setting of the MAT against regular tax liability. This MAT credit may expire or be on the verge of expiration for participants in SEZs who enjoy tax holiday for a prescribed number of years when they start operations due to absence of initial tax liability. Foreign investors will face difficulties in claiming tax benefits in their home jurisdictions for MAT paid in India. Further, the exemption granted to SEZ developers as to the levy of Dividend Distribution Tax @ 15% has been revoked by the Finance Ministry in 2011 severely affecting the IT industry.

The government finally took note of the increased disinvestment as a consequence of such taxes and proposed to make the imposition of MAT and Dividend Distribution Tax inapplicable to SEZ’s in 2015 [14].

3. E-Commerce Industry

NASSCOM in 2012 suggested the lowering of the interchange tax rate on debit cards transactions by the RBI. Debit cards possess lower risk in comparison to credit cards, the transactions being concluded immediately and the same should be reflected in the form of differential taxes. A standard 1-2% interchange/transaction fees were generally levied by banks. NASSCOM also recommended the introduction of a 2% tax incentive on the purchase of products online to facilitate increased purchases and encourage consumers to even undertake small value transactions online. Further, it emphasized that the base of e-commerce users have to be expanded. It commented on the differences in the Internet usage costs between China and India, USD 10 and USD 15-20 respectively. High internet usage costs can only be indicative of reduced Internet access. However, this is not to state that the E-commerce industry is unsuited for India due to infrastructural inefficiencies. NASSCOM has stated that India as of 2012 possesses over 100 million Internet users. Technology has to be developed which would reduce dropout rates of transactions. Further it suggested the creation of an online receipt repository which would store all online transaction receipts, accessible through mobile phones or the internet. It would contribute in increasing customer confidence by enabling tracking of payment, delivery etc.

The RBI in response to the recommendations of NASSCOM and the Online Payment Advisory Group [15] and in consultation with all concerned stakeholders, decided to put a maximum limit on the Merchant Discount Rate (MDR) for transactions undertaken with a debit card [16].

4. Transfer Pricing Issues

Transfer Pricing has become the dominant international tax issue affecting multinational corporations operating in India [17]. As noted by NASSCOM, a steep rise in litigation and the number of transfer pricing adjustments with the Indian Revenue Authority (IRA) has been observed due to ‘increased scrutiny’ by the IRA who has been rejecting the profit declared by foreign companies accruing to Indian subsidiaries by applying very high markups in this sector. Increased complications in setting valid prices through this process have arisen due to the rising presence of ‘highly complex transactions’ involving intangibles and multi-tiered services across the world. The Finance Act 2012 extended the applicability of domestic party transactions to certain related domestic parties, if the aggregate value of such transactions exceeds INR 5 crore, to any expenditure with respect to which deduction is claimed while calculating profits and to transactions related to businesses eligible for profit-linked tax incentives, including SEZ units under section 10AA [18].

NASSCOM has proposed a three pronged approach to the problem of backlog of cases and absence of certainty of price of transactions:

Implementation of Safe Harbour provisions to resolve existing disputes.
Introduction of Advance Pricing Agreements [19] to set fair and transparent prices.
Initiation of review of the structure and procedure of the Dispute Resolution Panel [20].

The Finance Act 2009 introduced section 92CB [21] in the Income Tax Act 1961 which provided for the subjection of the arms length price determined under section 92C or section 92CA to Safe Harbour Rules, to be declared by the Central Board of Direct Taxes (CBDT). For the valid determination of such a transfer price, the minimum transfer price that a taxpayer is expected to earn for international transactions is prescribed along with certain specific norms for particular transactions. The safe harbour transfer price for eligible transactions is subject to certain prescribed minimum ceilings [22]. A price determined in accordance with such guidelines would be deemed to be an Arms Length Price (ALP). To that extent the safe Harbour Rules are in the nature of ‘presumptive taxation’ and incentivises IT firms to avoid unnecessary litigation by opting for the same. Unilateral, bilateral and multilateral Advance Pricing Agreements, binding on the taxpayer and the revenue authorities for five consecutive years have been introduced with effect from 1 July 2012. Certain domestic transactions are inapplicable for APA’s in the absence of other monetary conditions/stipulations under law for entering into an APA. Documentation on comparables is required to be maintained to substantiate compliance with arms length principle.

The concerns of the prescribed rates include non-representation of industry benchmarks and economic realities in as much as the prescribed rates exceed the actual arms length prices, often leading to the risk of double taxation in foreign jurisdictions. The division of IT services into two components has also been criticized as many of the activities might overlap. NASSCOM has stated that it is not clear how the existing current issues are proposed to be resolved. The introduction of domestic parties as applicable parties to be subject to the transfer pricing regulations will only increase the complexity in the law. There has been subsequent judicial development involving the establishment of some principles for the valid determination of comparables for the purpose of identifying an acceptable transfer price which will be discussed in the next blog post.

5. Other Recommendations

5.1. Concerns with the Union Budget Proposals

NASSCOM summarized that the Union Budget Proposals 2012-13 focus on the reduction of the fiscal deficit through higher taxation rather than expenditure management. More specifically, it focuses on the following concerns of the IT Industry:

The issues of tax simplification have not been resolved as no roadmap for the implementation of the Direct Taxes Code and the Goods and Services Tax Bill has been provided.
The increase in the Current Account Deficit should have incentivized the government to introduce measures which facilitate high value exports, which has been wholly ignored from the budget.
Increase in indirect taxes, namely excise duty and service tax is a retrograde policy measure.
Restrictive conditions in the SEZ Act 2005 which do not facilitate the setting up of small companies, have to be modified.
There is no mention of reduction of Tax Deducted at Source (TDS) for SMEs and introduction of non-profit linked incentives in the form of employment benefits etc. in the proposal.
Similar provisions should also be introduced for Tier II and III cities in the country.
Some announcements as to the simplification of service tax refund and the removal of the provisions involving dual levy of service tax and VAT are not sufficient to resolve ambiguities in law. NASSCOM, in light of the increasing delays of service tax, suggested exemption of export activity from such tax and the applicability of a simplified mechanism similar to CENVAT wherein exemption will be provided to exporters in proportion of their exports to total sales.

5.2. Request for Clarity in Classification of Transactions and Guidelines

NASSCOM in its pre-budget recommendations had suggested that in light of the confusion of the characterization of software as goods or services and the resultant dual taxation, in the form of taxes paid to both the Central and the State Governments, the provision of software, whether customized or packaged should be treated as a service irrespective of the media and mode of transfer with the assurance from the States that no VAT shall be leviable on software. Further, guidelines have to be outlined for various e-commerce transactions like database subscription, cloud computing, webhosting and data warehousing. Onsite exporter of services are being denied the benefits of certain tax exemptions due to the sunset of STPI provisions, thus forming the need for a formal clarification by the government deeming these activities to be an integral component of the IT services industry.

5.3. New Retrograde Obligations under Law

NASSCOM emphasized that the introduction of certain provisions, related to GAAR, related party transactions and the withholding of tax in the Finance Bill, some of these retrospective in nature, enhance the difficulties faced by the IT industry. Increased obligations on the corporate tax payers in the form of imposition of additional taxes will only increase the scope of multiple interpretations of the provisions which will lead to the exercise of discretionary powers by the tax authorities.

6. Endnotes

[1] As of September 2011, a significant majority of the 143 operational SEZs in the country belonged to the IT/ITeS and electronic hardware as per data released by the Ministry of Commerce and Industry.

[2] See: http://articles.economictimes.indiatimes.com/2012-02-25/news/31099874_1_sez-unit-sez-promoters-multi-product.

[3] Section 10AA of the Income Tax Act provides for 100% income tax exemption on export income for SEZ units for the first five years, 50% for the next five years and 50% of the ploughed back export profit for the next five years.

[4] See: http://www.business-standard.com/article/economy-policy/govt-imposes-18-5-mat-on-sez-developers-units-111022800153_1.html.

[5] See: http://articles.economictimes.indiatimes.com/2005-07-08/news/27506703_1_special-economic-zone-act-sez-act-sez-bill.

[6] (2013)260CTR(Kar)146.

[7] The doctrines of promissory estoppel and legitimate expectation, arising from legal relationships and reasonable expectation, respectively, are flexible equitable reliefs not defined in any statute. Judicial decisions have held that a party would not be entitled to go back on a clear and unequivocal promise which was intended to create legal relations, knowing or intending that it would be acted upon by the other party to whom the promise was made and acted upon by the other party under the doctrine of promissory estoppel. Legitimate expectation of a certain treatment arises against representation by an administrative authority, whether express (through promises), or implied (through consistent past practice) despite absence of any right otherwise.

[8] It was held that the action of the government is legal as every tax exemption provision should also incorporate a sunset clause. The deletion of the exemption under law would only reduce the erosion of the tax base.

[9] See: http://articles.economictimes.indiatimes.com/2011-05-11/news/29532409_1_sez-act-minimum-alternative-tax-mat.

[10] Madurai District Central Cooperative Bank Ltd. v. ITO (1975) 101 ITR 24(SC), the form and method of introduction of a legislation is not of importance provided the requirement of competence by the legislature to pass the deemed law with respect to its subject matter is satisfied. An amendment of a taxing statute, by an unconventional method of incorporation through an act of a different pith and substance is not unconstitutional. The primary purpose of the Finance Acts is to prescribe tax rates for taxes specified in the Income Tax Act. However, the above fact does not restrain the freedom of the legislature to impose an altogether new tax through the Finance Act or any other deemed legislation besides the Income Tax Act.

[11] See: http://www.nasscom.in/nasscom-prebudget-recommendations.

[12] Ibid.

[13] Ibid.

[14] See: http://articles.economictimes.indiatimes.com/2015-02-13/news/59119589_1_sez-developers-and-units-minimum-alternate-tax-special-economic-zones.

[15] Formed in 2012 to examine the challenges faced by the E-commerce Industry in India and to recommend changes needed to facilitate the creation of a vibrant online payment sector.

[16] Not exceeding 1 percent for transaction amount for value above 2,000. The directive was issued under section 18 of the Payments and Settlement Systems Act, with effect from July 1, 2012.

[17] See: http://www.pwc.com/gx/en/international-transfer-pricing/assets/india.pdf.

[18] This amendment would extend to any other transaction as may be specified and would be applicable for FY 2012-13 and subsequent years.

[19] An Advance Pricing Agreement, generally covering multiple years, entered into between a taxpayer and at least one tax authority lays down the method of transfer pricing to be applicable to the taxpayer’s inter-company transactions which eliminates the need for transfer pricing adjustments for enclosed transactions provided the terms of the agreement are complied with.

[20] The Finance Act 2009 inserted section 144C in the Income Tax Act which provides for the constitution of an alternative dispute resolution mechanism for transfer pricing taxation matters, namely a DRP (Dispute Resolution Panel) consisting of three commissioners rank officers.

[21] Section 92CB defines Safe Harbour to be ‘circumstances under which the income tax authorities shall accept the transfer pricing declared by the assessee.’ The procedure for adopting safe harbour, the transfer price to be adopted, the compliance procedure upon adoption of safe harbours and circumstances in which a safe harbour adopted may be held to be invalid is specified in the new rules in 10TA to 10AG issued by the CBDT on 18th September 2013.

[22]

Provision of software development services and information technology enabled services with insignificant risks- upto rs 500 crore- 20% or more on total operating costs, above rs 500 crore- 22% or more on total operating costs.
Provision of knowledge processes outsourcing services with insignificant risks-25% or more on total operating costs.
Provision of specified contract R & D services wholly or partly relating to software development with insignificant risks- 30% or more on total operating costs.

7. Author Profile

Pavishka Mittal is a law student at West Bengal National University of Juridical Sciences, Kolkata and has completed her second year. She takes contemporary dance very seriously and hopes to contribute to the dance community in India. Other than dancing, she indulges in binge-watching in her spare time.

For more details visit https://cis-india.org/raw/policy-shaping-in-the-indian-it-industry-recommendations-by-nasscom-2006-2012

Policy Shaping in the Indian IT Industry: Recommendations by NASSCOM on Transfer Pricing, 2014-2016

Pavishka Mittal — 2016-07-29T08:39:48Z

This is the final part of a series of three blog posts, authored by Pavishka Mittal, tracking the engagements by NASSCOM and iSPIRT in suggesting and shaping the IT industry policies in India during 2006-2016. This post aims to explain the law of transfer pricing in India, and the suggestions made by NASSCOM regarding the same. Transfer pricing is regarded as one of the most controversial operations of multinationals resulting in tax avoidance and arbitrage.

1. Introduction

2. Method of Operation of Tax Avoidance through Invalid Transfer Prices

3. The Law of Transfer Pricing in India

4. Recommendations by NASSCOM in its Pre-Budget Memorandum, 2014-2015

5. Recommendations by NASSCOM in its Pre-Budget Memorandum, 2015-2016

6. Recommendations by NASSCOM in its Pre-Budget Memorandum, 2016-2017

7. Endnotes

8. Author Profile

1. Introduction

The following blog post, the third part in the series on ‘Policy Shaping in the Indian IT Industry’ aims to explain the law of transfer pricing in India and the suggestions made by NASSCOM regarding the same. Transfer pricing is regarded as one of the most controversial operations of multinationals resulting in tax avoidance and arbitrage. The blog post proceeds with explaining how transfer pricing is used by MNCs to avoid tax. The applicable legislations and government notifications are stated to better understand the policy recommendations. The law discussed is applicable to all business concerns, including the IT industry. Judicial development as to tests for valid comparables, arms length prices discussed is with particular reference to the software industry.

2. Method of Operation of Tax Avoidance through Invalid Transfer Prices

When an entity of a multinational organization sells goods, provides services etc to another entity of the same organization in another country, the price charged for these goods/services is called ‘transfer price’. Since transactions involving transfer pricing are between controlled or related legal entities within an enterprise, these prices may be entirely arbitrary and completely unrelated to the costs incurred in the supply of these goods/services. This is done to transfer profit made in a jurisdiction which has higher taxes to another entity of the same organization in another jurisdiction where taxes are low. Essentially, revenue is shifted to lower profits in a division of an enterprise located in a country that levies high income taxes and raise profits in a country that is a tax haven that levies no (or low) income taxes causing concern for government taxing authorities. The MNC as a whole maintains higher profits in the form of tax saving. Ideally, a transfer price should match either what the seller would charge an independent, arm's length customer, or what the buyer would pay an independent, arm's length supplier. Transfer pricing, also referred to as base erosion and profit shifting (BEPS), is a major tool for corporate tax avoidance. The Organisation for Economic Cooperation and Development (OECD) has fairly comprehensive guidelines which have been adopted with some modification by many countries.

3. The Law of Transfer Pricing in India

The Finance Act 2012 rendered domestic transactions between related entities also subject to the law of transfer pricing, to avoid tax arbitrage between states.

Sections 92 to 92F of the Income Tax Act 1961, largely based on the OECD’s guidelines, deal with the law of transfer pricing for intra-group cross border and specific domestic transactions. Income or expenses arising from these international or specified domestic transactions have to be computed according to the principles applicable for the determination of the arms length price. Section 92F defines an Arms Length Price as the price applied, or proposed to be applied to transactions between persons other than associated enterprises in ‘uncontrolled conditions’ [1].

The concept of a range of values representative of an Arms Length Price (ALP) is not acceptable under Indian law, a single price has to be submitted by the taxpayer by the calculation of the arithmetic mean in case of multiple values. Range benefit percentage, applicable in differences between the transfer price and the ALP, is released for each individual industry, starting from FY 2012-13. Since the burden lies on the taxpayer to prove that the deemed Transfer price is the ALP, he is required to maintain documents and information on an annual basis as specified under Rule 10D of the Income Tax Rules, 1962. Section 10D does not have to be complied with for international transactions below INR 10 million and specified domestic transactions below INR 50 million. However, the taxpayer should possess sufficient data to substantiate the ALP. Safe harbour rules, to be released by the CBDT, would obviate the need for companies to carry detailed comparability and benchmarking exercises. In Vanenburg Group B.V. and Dana Corporation, the Authority for Advance Rulings held that income not subject to tax in India would not have to comply with TP regulations of India. However, the same does not extend to entities enjoying a tax holiday in India. Thus, the transfer pricing regulations would have to be complied with by IT firms in SEZ’s etc. The use of foreign comparables is not permitted under Indian law.

4. Recommendations by NASSCOM in its Pre-Budget Memorandum, 2014-2015

In the pre-budget memorarandum on transfer pricing issues, published on June 2014, NASSCOM made the following recommendations [2]:

Use of Multiple Year Data: Current Indian TP regulations, Rule 10B (4) of the Income tax Rules 1962 (Rules) provide for use of data of the financial year in which the international transaction has been entered into. It further permits use of multiple year data (period not being more than two years prior to such financial year), if such data reveals facts which could have an influence on the determination of transfer prices in relation to the transactions being compared. NASSCOM argued that single year data may not adequately reflect the business conditions, performance of the taxpayer and multiple year data is useful to even out the fluctuations caused by business, economic and product life cycle. Further, if relevant data is not available in the public databases at the time when the benchmarking exercise is undertaken, multiple/prior year data should be accepted. Relevant clarifications should be incorporated in the regulations that clearly permit use of multiple year data for comparability analysis.
Use of Interquartile Range instead of Arithmetic Mean: Indian transfer pricing regulations stipulate an arithmetic mean of the margins of all comparables to determine the arm's length margin in case more than one comparable is identified. It was argued that Arithmetic mean of margins leads to a skewed determination of arm’s length margins as it is influenced by outliers. While median is acceptable globally, inter-quartile range is also used in many countries as the outcome is less sensitive to extremes in the sample. The TP regulations be amended to permit application of the concept of an arm’s-length range of prices, similar to provisions contained in the OECD regulations or allow use of inter quartile range as those of other developed nations which would be more indicative of market realities.
Retention of Tolerance Band as Standard Deduction: The newly inserted subsection 2A to section 92C through the Finance Act 2012 with effect from 1st April 2002 clarifies that the benefit of 5 % is not a standard deduction and overturns the laws as interpreted by various Tribunals. The tolerance band limits have themselves been amended to the price at which the international transaction or specified domestic transaction has actually been undertaken, provided that the transaction price does not exceed one per cent, in case of wholesale traders; and does not exceed three per cent, in all other cases. NASSCOM recommended that since the law requires the arm’s length price to be the arithmetical mean and does not prescribe inter quartile range which is a globally accepted best practice, the provision of tolerance band as standard deduction be retained.
Certain and Consistent Guidelines should be Issued by the Board after Giving Due Consideration for the following factors:
1. Inter-Company Loans: there should not be requirement for charging interest loans which a) are quasi-equity in nature (these loans should be regarded as equity), and b)are provided out of surpluses of the Indian parent. Global practices for benchmarking interest rates to be charged, if any, by considering comparable interest rates prevailing in the borrower’s country.
2. Guarantee / Letter of Comfort / Undertaking: Arms length price should be determined in terms of the future benefits to be received by the company furnishing the guarantee and the business rationale involved. The association of the parent company for securing contracts as a group should not be construed as resulting in international transactions between the Indian Company and the overseas subsidiary.
3. Headquarter and Regional Headquarter Cost Allocations: There is lack of data in the public domain as to industry benchmarks related to management payouts, guidance as to specific documentation should be given.
4. Adjustments for Differences in Functions and Risks: Clear guidelines on carrying out economic and risk adjustments with proper methodology required. Due consideration should be awarded to business strategies and commercial realities such as market entry strategies, non-recovery of initial set-up costs and other legitimate business peculiarities while determining the arm’s length pricing.
5. Guidance as to the Meaning of Restructuring Required to be Laid down: Section 92B considers a transaction of business restructuring or reorganization as an international transaction. However, there is no definition of restructuring or reorganization in the Act. Further, there is no clarity as to whether a transaction of business restructuring or reorganization would need to be reported if the act of business restructuring results in the enterprises becoming an AE.
6. Invalidity of Extension of Transfer Pricing Provisions to Corporate Actions: Transactions such as issue, buyback and redemption of shares are capital transactions and are not subject to income tax, except in the case of capital gains arising out of these transactions. The understanding is that these corporate actions are initiated by the shareholders of the company and do not have a bearing on the taxable income of the entity. However, the Revenue without any rationale has been classifying these as international transactions which have to be benchmarked and documented. If this is continued, transactions such as issue of bonus shares (ratio of bonus issue), and rate of dividend declared, or discount/premium on issue or redemption of preference shares etc. may also get covered within the purview of transfer pricing provisions. NASSCOM stated that guidance as to the rationale of this transfer pricing application is necessary. Further, guidance as to the terms and conditions to be complied with in instances of issue, buyback or redemption of share to mitigate the exposure to transfer pricing litigation is required.
Enlarged Scope of “International Transaction” Retrospectively: The intent of TP regulations being the reduction of tax avoidance, the provision to bring the business restructuring transactions within the transfer pricing ambit should be withdrawn. The definition of intangibles being too broad and open for interpretation needs to be rationalized. Guidance as to the appropriate methodologies to evaluate ALPs of intangibles is required. Given the increasing quantum of cross border financing and inter-company lending etc., appropriate guidance should be issued in this regard. Further, the amendment, being substantive in nature, shall be made prospective to achieve certainty and stability.
Upward Revision in Monetary Threshold of TP Documentation Required: For aggregate value of transactions exceeding INR 10 million, TP documentation is required. This monetary threshold has not been altered since the introduction of TP Regulations in the Income-tax Act, 1961. Due to the increasing quantum of cross border transactions, the prescribed limit is low considering the rise in the value of software traded, requiring almost all companies in this sector to maintain onerous documentation.
Penalty Provisions: Penalty provisions have been made more stringent vide Finance Act 2012. Transfer Pricing Officer can now ask the taxpayer to pay penalty under section 271AA at the rate of 2 per cent of value of international transaction due to failure to keep information in addition to another 2 per cent under section 271G for not furnishing the information besides regular penalty under section 271(1)(c) of the Act. NASSCOM suggested that the penalty should be restricted to tax in dispute and not linked to the value of transaction.
Domestic Transfer Pricing: Section 92BA has been inserted vide Finance Act 2012 by which the coverage of transfer pricing has been expanded to include certain 'Specified Domestic Transactions' if the aggregate amount of all such transactions entered by the assessee in the previous year exceeds Rs. 5 crores in the previous year. NASSCOM suggested that the threshold limit be extended to Rs. 15 crore.

The term ‘Specified Domestic Transactions’ has a very wide coverage and a relatively low monetary threshold for exemption. It would include any expenditure in respect of which payment has been made or is to be made to a related party referred to in clause (b) of sub-section (2) of section 40A of the Act. Since such expenditure would include capital expenditure, a clarification as to the applicability of these provisions to revenue expenditure only has to be made. Further, the scope of the provision is not in sync with the SC decision in the case of Glaxo SmithKline. The Supreme Court had held that TP should be applicable to transactions between a profit making and a loss unit / company and between units / assesses having different tax rates. Other than the scenarios contemplated above, a corresponding adjustment should be allowed and hence provided for on the statute.

This amendment also covers a scenario wherein the payment of remuneration by the company to its director or relative of such directors is also required to be at arm's length which casts an onerous responsibility on the company vis - à- vis justification of the arm's length nature of such payments.

A clarification as to ambiguity in relation to the definition of the term ‘closely connected persons’ as described in section 80IA (10) of the Act is required. Guidance for benchmarking directors remuneration should be provided. Further, clarity should be provided with regard to inter-unit allocation of costs between eligible and non-eligible units i.e. whether corporate cost allocations from a non-tax holiday unit of a company to a tax holiday unit of the same company would get covered within the provisions of Section 80-IA and consequently need to be reported as a specified domestic transaction.

The Advance Pricing Agreement (APA) provisions, only applicable to only international transactions presently, should be extended to domestic transactions governed by TP regulations.
Changes in Dispute Resolution Panel: The DRP issues directions with the stated objective of keeping the issues alive since the Revenue has filed appeals before the High Court / Supreme Court which is contrary to the objective of dispute resolution. It is structurally suffering from impaired independence owing to the fact that the DRP is a constitution of CIT/DIT. It is not able to fulfil its central purpose of dispute resolution due to the fact that CIT/DIT has to discharge their regular duties in addition to these duties involving revenue collection targets. NASSCOM recommended that DRP be constituted as an ‘independent’ judicial board with panelists from economic, legal and accounting backgrounds having knowledge of income tax matters. To avoid actual or perceived bias, specific provisions may be inserted to restrain a jurisdictional Commissioner/ Director from being appointed as a member of the DRP hearing cases falling within his/ her jurisdiction. Further cases which are covered by decisions of courts and are found to be without merit should be withdrawn suo-moto.
Absence of Article 9(2) in DTAAs with Belgium, Germany, France, Singapore, and the Republic of Korea: The Tax administration has to follow the practice of not admitting cases of economic double taxation under Mutual Agreement Procedure and Advance Pricing Agreements. Negotiation of bilateral APAs (in case an Indian entity has associated enterprises in such countries), MAPs are disallowed in such countries. Though the OECD has stated that two sovereign states can mitigate double taxation arising out of TP adjustments through invoking Article 25(3), India has had reservations with such an approach on the ground OECD Model Tax Conventions do not represent internationally agreed guidance. India suggested an Inter-Governmental Commission with a balanced representation from the Governments of developing and developed countries to take decisions with regard to these provisions. To ensure continued trade with these countries, advice is needed from the government on how to address challenges arising from the absence of these provisions in tax treaties.
Rollback for APAs: Currently an application for APA, once agreed upon is prospective in the sense that they are applicable for the years agreed upon in the agreement. It is recommended that once an APA is finalized, the tax payer should be allowed to close the open years for which assessment proceedings have not yet been initiated and years for which assessment or appeal proceedings are pending before the TPO, DRP/CIT (A), having regard to the agreement reached in the APA.
Safe Harbour Rules and its Impact on Assessments: In contrast to APAs, the Safe harbour notifications have had limited uptake.
1. Rationalization of Margins: The current margins varying from 20 to 30 percent depending on the characterization of the entity are very high and are not indicative of ALPs. More feasible margins should be declared after taking into account the rationalization of margins by the higher appellant authority. The imbalance APA and the Safe Harbour scheme has to be restored, especially for small and medium enterprises, to reduce unnecessary pressure on the APA system as the preferred route.
2. Overlaps between R&D and Software Development: Both are separate categories having different limits under the safe harbour rules. The substantial overlaps between the above activities due to a very fine line of distinction between the two are not reduced through the present ambiguous definitions, subject to interpretation. Due to the exclusion of research and development from software development, information technology enabled services and knowledge process outsourcing services in the draft rules, new litigation on the classification of such service providers would arise. NASSCOM, thus, recommended that both the categories be merged and revised safe harbour rules be notified.
Levy of Penalty on Single Transaction to be Rationalized: Since penalty provisions are implemented with the intention to get the tax payer to adhere to the provisions of the Act rather than cause considerable hardship, only single penalties should be levied to avoid duplication of penalty. In the event that a tax payer has not maintained the documents, such taxpayer should be penalized only under section 271AA and not under both section 271 AA and section 271 G. Further, penalty should not be imposed for non-reporting of transactions which gets covered under the purview of international transaction by virtue of retrospective amendments, due to impossibility of performance.
Non-Processing of Refunds when Notice Issued u/s 143(2): The Finance Act 2012 has inserted clause 1(D) to section 143 of the Act, specifying that the processing of a return under section 143(1) of the Act shall not be necessary, where a notice has been issued under section 143(2) of the Act. Though the language of the aforesaid provision suggests that it is directory and not mandatory in nature, however, it has been observed that the Tax Office is not processing any refunds under section 143(1) because of this provision. Further, in case of the aforesaid entities, a draft assessment order is passed and typically it takes almost one year more to get the final assessment order. Following the above, excess taxes if any paid over the final tax liability by any entity gets stuck for ~ five financial years. In case the final assessment order is high or there is an undue demand, assesses are required to pay further taxes without getting the refund originally due causing undue hardship to assessees. NASSCOM recommended that the clause prescribing a time limit of four years from the end of the financial for the completion of assessment of entities to which transfer pricing provision applies be deleted. This provision is also causing undue pressure on the Revenue in the form of interest liability for a longer period.

5. Recommendations by NASSCOM in its Pre-Budget Memorandum, 2015-2016

In addition to repeating the key contentious issues highlighted in the previous pre-budget memorandum, some additional issues were brought up [3]. NASSCOM requested the government to make the revised to be issued Transfer Pricing Policy retrospective in nature and in sync with global practices. The Finance Minister had announced significant changes in Transfer Pricing rules and policy in the July 2014 Budget with an aim to address disputes and litigations around estimating ALPs.

Applicability of Transfer Pricing on Companies Eligible for Tax Holiday u/s 10A/10AA: NASSCOM contended that the assessing officers are “arbitrarily and/or mechanically” invoking the transfer pricing provisions even in cases where the assessees are eligible for tax relief’s u/s 10A/10AA or have related party transactions with well-regulated tax jurisdictions. It recommended that transfer pricing provisions shall not be invoked against tax payers:
- who are entitled to tax holidays (section 10A/10AA reliefs) in India,
- In respect of transactions with countries as listed in a “white list” (to be prescribed) which shall include jurisdictions having higher tax rates/best tax practices.
Filing of Form 3CEB by Foreign Companies: As per the existing Indian Transfer pricing provisions, there are conflicting views, on whether, the foreign companies are required to file Transfer Pricing report in Form 3CEB in India, even if income subject to an international transaction is not chargeable to tax in India or where the transaction entered with the foreign entity is already reported by the Indian entity in its Form 3CEB as per the provisions of the existing Indian transfer pricing law. In principle, the foreign residents not having a permanent establishment in India should not be required to file Transfer Pricing report (Form 3CEB) in India keeping in view the compliances done by the Indian entity. NASSCOM recommended the government to clarify that that the provisions of Indian transfer pricing would not apply to foreign companies/foreign residents unless they have a permanent establishment in India.

6. Recommendations by NASSCOM in its Pre-Budget Memorandum, 2016-2017

In addition to repeating the key contentious issues highlighted in the previous pre-budget memorandum, some additional issues were brought up [4]:

Changes Proposed in the Rules for the Computation of the Arms Length Price: The draft rules released continue to deviate from global norms and associated statistical concepts. NASSCOM stated that the prescribed percentile range of 35th to 65th, mandating minimum number of comparables to qualify for use of range and multiple year data will not have a significant impact on the current situation.
- Applicability of Range and Multiple Year Data on Selected Methods: The rules restrict the application of the following to Transactional Net Margin Method, Resale Price Method and Cost Plus Method used to determine ALPs. This rule, being in contrast to international practice wherein no such restrictions on the method to be applied for using range and multiple year data for determining AlPs exist should be removed. New rules which do not confine the use of range, multiple year data to the above methods should be released.
- Number of Comparables for Applicability of “Range” Concept: The rules prescribe a minimum of 6 comparable companies, based on the similarity of their functions, assets and risks (FAR) with the tested party for the adoption of “range” concept which may be difficult for all transactions due to constraints such as data availability, business comparability, quantitative comparability, etc. Consequently, most taxpayers may not be able to adopt the range concept. Further, if during the audit stage the number of final comparables fall below the mandated 6, due to rejection of certain comparable companies, the method of determining ALP will change from “Range” concept to Arithmetic mean which will add to complexities and increased litigation. NASSCOM stressed that the OECD Guidelines do not outline a minimum number of comparable entities to be considered for calculation of range. NASSCOM recommended that the rules should not specify any minimum number of comparable entities as a prerequisite for the use of “range” concept. Alternatively, it suggested a reduction in minimum requirement of comparable companies for application of the range concept from 6 to 4 comparable transactions. A clarification may be issued as to the applicability of the arithmetic mean concept in case the number of comparables fall below 4. Further, guidance may be provided regarding the selection of appropriate comparables considering the various constraints thereby allowing flexibility to the taxpayers in preparing reliable set for comparable companies.
- “Range” between 35 to 65 Percentile instead of Inter-Quartile Range: The rules provide a range between 35 to 65 percentile of the data set which may not provide relative reliability on comparable price. The range of 35th to 65th percentile is narrow than interquartile range 25th to 75th percentile, restricting the set of finally selected comparables. Further, use of inter-quartile range (25th to 75th percentile) is amongst the globally accepted best practice and also closer to economic realities wherein prices, and or margins, are compared to those within a range and not at to a particular point. NASSCOM recommended that the rules be modified to provide that the interquartile range from the 25th to 75th percentile would be used to test the arm’s length nature of the transaction.
- Use of Multiple Rear Data: Rule 10B(4) as notified provides that the data to be used in analyzing the comparability of an uncontrolled transactions with an international transaction or a specified domestic transaction will be:
  - the data relating to the current year ; or
  - the data relating to the financial year immediately preceding the current year, if the data relating to the current year is not available at the time of furnishing the return of income by the assessee , for the assessment year relevant to the current year.
  Further data of the current year, shall be used during the transfer pricing audit if it becomes available at the time of assessment.
  
  The above para prescribes the use of “Multiple year data” concept in case of only three methods viz. the Transactional Net Margin Method, Resale Price Method, or Cost Plus Method. NASSCOM highlighted that the requirement of use of the financial data of comparable companies which is not available in the public domain on or before the specified date, but which becomes available subsequently by the time of assessment, will not be in line with the contemporaneous documentation requirement under the Indian TP provisions. It is not clear whether at the time of assessment, the data of the current year can be used by both the taxpayer and the department. It further highlighted that the illustration to the notification provides for the use of the data of the current year and immediately preceding 2 years in contrast to the notification providing for the use of data of the current year or the data relating to the financial year immediately preceding the current year contributing to ambiguity. Also use of data of current year and the 2 preceding years is not in line with the global best practices which allow three years data to be used excluding current year’s data. It will be an issue for overseas tested parties, which follow rules for data as per their respective jurisdictions ( eg. previous three years data) to get and use current year data.
  
  NASSCOM recommended that the taxpayer should be allowed to use data of prior three years (not including current year), which is available in the database at the time of preparation of TP documentation. Also it should be extended to CUP, PSM and other methods as well. The data of current year can be used only if it is available at the time of preparation of TP documentation and not subsequently at the time of assessment. The provision that use of data of the current year can be used during the transfer pricing assessment if it becomes available should be done away with as by that time pricing and commercial arrangements would have already been set keeping in mind the data available. The benefit of multiple year data should also be made available to past years whose assessment proceedings have not yet been completed i.e for FYE 2012, FYE 2013 and FYE 2014.
Concerns on APA Roll Back Provisions in cases of DTAAs Comprising Article 9(2): Rule 10 MA(3) of the APA rollback rules provides as follows: “Notwithstanding anything contained in sub-rule (2), rollback provisions shall not be provided in respect of international transaction for a rollback year, if – ….(ii) the application of rollback provisions has the effect of reducing the total income or increasing the loss, as the case may be, of the applicant as declared in the return of income of the said year.

NASSCOM contended that the above position of rollback is not justified in the case of bilateral APA applications wherein the treaty itself provides for corresponding deduction in the other contracting state for avoidance of double taxation, i.e., Article 9(2). It recommended that suitable modifications be made in the present rules, to allow rollback provisions which have the effect of reducing the total income or increasing the loss of the applicant for the relevant year.
Risk Based Assessment Audits: NASSCOM stated that in relation to transfer pricing audits, presently a transaction value threshold is being adopted by the Revenue for case selection; which should be replaced by an objective risk based assessment approach which may be set out through instructions/circulars on an annual basis. The recent Instruction No. 8/2015 issued on October 16th, 2015 sets out that the Assessing Officer should apply more discretion in referring cases for scrutiny by the Transfer Pricing Officer. It would be helpful if some criteria or parameters are laid out based on which a referral could be made. Further, a transaction value based audit approach is not always an indicator of the need for scrutiny for such transactions and should be supplemented with some qualitative criteria for case selection.
Safe Harbour Rules Not Effective for the Sector - Need for Rationalizing the Margins: Currently, the margins notified under the safe harbour vary from 20 to 30 percent depending on the characterization of the entity, which are high and are not reflective of market realities. Redefining safe harbour margins, which have so far remained ineffective, should be undertaken on a priority to encourage uptake by the Industry. Emphasizing the importance of safe harbours for easing the regulatory compliance for SMEs, NASSCOM recommended more practical and feasible margins (that are reflective of ALPs) be notified under the safe harbour rules, especially after taking into account the rationalization of margins by the higher appellant authority.
Continued Aggressive Assessments: The Indian IT Industry has been facing several unwarranted assessments on account of transfer pricing adjustments. Tax authorities continue to pose problems by adopting different criteria of selecting comparables for benchmarking. Further, filters adopted by the authorities across jurisdictions are ignoring business conditions. Tax authorities use companies earning supernormal profits (margins 50% to 80%) and industry giants as comparables. Recent rulings and judgments passed in favour of the taxpayers are continued to be overlooked.
Ambiguities in Domestic Transfer Pricing: The Finance Act 2015 increased the threshold for applicability of Domestic Transfer Pricing from INR 5 crores to INR 20 crores. However ambiguity around some provisions like directors’ remuneration and associated comparables continue. Domestic transfer pricing provisions should apply only in transactions involving income escaping tax and not in case tax neutral transactions i.e. where there is a transaction between two entities both of which pay tax, such a transaction will be tax neutral since a deduction in the hands of one entity will automatically be taxed in the hands of the other entity. Hence in such a case, domestic transfer pricing provisions should not apply and there should be a specific exemption introduced in the law to this effect. NASSCOM repeated its concerns highlighted in the previous pre- budget memorandum.

7. Endnotes

[1] It prescribes the following methods for its computation:

Comparable uncontrolled price (CUP) method,
Resale price method (RPM),
Cost plus method (CPM),
Profit split method (PSM),
Transactional net margin method (TNMM), and
Such other methods as may be prescribed.

As notified by the CBDT, any such other method may be used which details the price for uncontrolled transactions between unassociated companies in similar circumstances after the consideration of all relevant facts.

[2] See: http://www.nasscom.in/sites/default/files/policy_update/Transfer-Pricing_NASSCOM-Jun14.pdf.

[3] See: http://www.nasscom.in/sites/default/files/policy_update/NASSCOM%20pre-budget%20recommendations%20-%20Transfer%20Pricing.pdf..

[4] See: http://www.nasscom.in/sites/default/files/policy_update/NASSCOM-pre-budget-recommendations-Transfer-Pricing.pdf.

8. Author Profile

For more details visit https://cis-india.org/raw/policy-shaping-in-the-indian-it-industry-recommendations-by-nasscom-on-transfer-pricing

Policy Shaping in the Indian IT Industry: Comparative Analysis of Recommendations by NASSCOM and iSPIRT, 2013-2016

Pavishka Mittal — 2016-07-04T09:34:43Z

This is the second of a series of three blog posts, authored by Pavishka Mittal, tracking the engagements by NASSCOM and iSPIRT in suggesting and shaping the IT industry policies in India during 2006-2016. This post conducts a detailed comparative analysis of NASSCOM’s and iSPIRT’s specific policy recommendations from 2013-2016. To facilitate comparison, the blog post is written thematically on the lines of major issues highlighted by market players in the IT industry.

1. Introduction

2. Taxation Issues in the Software Industry

2.1. Issue of Double Taxation in the Software Industry

2.2. NASSCOM's Tax Concerns

2.3. iSPIRT's Tax Concerns

3. Concerns with Respect to the Regulatory Mechanism for E-Commerce (B2B Commerce)

4. Other Policy Recommendations

5. Endnotes

6. Author Profile

1. Introduction

Indian Software Product Industry Roundtable, or iSPIRT, is a think tank formed in early 2013 by about 30 product companies and individuals to protect the interests of the Indian software product industry. The organization believes that the market for software products is bound to grow in the future, both globally and locally, whose benefits should be derived of through cost efficiencies and resource optimization through the mechanism of free markets. This blog post, second in a series on ‘policy shaping in the Indian IT industry’, conducts a detailed comparative analysis of NASSCOM’s and iSPIRT’s specific policy recommendations from 2013-2016. The author has examined the more contentious issues due to difficulties in stating all the policy recommendations of these organizations over a period of four years in a single post. The law is explained, wherever necessary. Further, in the absence of reliable data on a particular policy position of either organization, no assumptions regarding the same have been made. To facilitate comparison, the blog post is written thematically on the lines of major issues highlighted by market players in the IT industry. Transfer pricing issues will be examined in the next blog post.

2. Taxation Issues in the Software Industry

2.1. Issue of Double Taxation in the Software Industry

There has been a general practice of the payment of both VAT and Service Tax on sale of software, which involve the provision of maintenance services etc along with the product. The applicable law on taxation has been explained below for a better understanding of the policy positions of the deemed organizations. Section 65B(44) of the Finance Act 2012, which defines ‘services’ includes ‘declared services’ under section 66E [1] and excludes ‘deemed sales’ under Article 366(29-A)(b) [2] of the Constitution involving a transfer of title in goods. A combined reading of all the provisions reveal that every transfer of goods on lease, license, hire under section 66E(f) does not result in the transfer of right to use goods under Article 366. It has been held that the transfer of right to use the goods under Article 366 involves a transfer of possession and effective control over the goods [3]. Thus, a license to use software which does not transfer ‘the right to use software’ would not qualify to be a sale/ deemed sale under law and would be governed by section 66E(f). Thus, from a general reading of the law, it can be concluded that the terms of the agreement involving transfer of pre-packaged or canned software under a license to use the software would have to be examined to decide the applicability of article 366 of the Constitution, that is, to decide whether the license to use packaged software involves the ‘transfer of right to use’ the deemed software.

The Madras HC in Infotech Software Dealer Association v. Union of India [4] held that licensing agreements involving the transfer of rights to use software to a licensee who is not permitted to sell, license or distribute the software by the licensor who retains copyright and hence ownership rights in the goods will not be sale or ‘deemed sale’ transactions as per article 366(29A)(d) of the Constitution as no transfer of software is made out from the transaction. The test of effective control as to the transfer of right to use the goods has been followed by the Madras HC. In the present case, it was held that software owner while retaining copyright protection entered into master end use licensing agreements which enabled the petitioner association to market the software to individual end users, thus, Article 366(29A)(d) was not attracted in the absence of transfer of software. Restraints/ conditions on the free enjoyment of the software in the licensing agreement indicate service tax liability. Any imposition of service tax on ‘goods’ would not be deemed to be unconstitutional without examination of the transaction. The source of confusion remains in the fact that notwithstanding software are goods, the transaction involving its transfer would have to be examined for taxation purposes. Manner of delivery is also of consonance in the determination of character of the transaction. It has been held that delivery of online content would only be a service in contrast to transfer of software through media, or embodied in the computer itself.

To summarise, jurisprudence and legislations have recognized packaged or canned software as tradable goods for the purposes of VAT/Sales Tax. “IT Software’ has also been recognized as goods under the Indian Central Excise Tariff Act. Further, Packaged or canned software is recognized as a ‘packaged commodity’ for the purposes of the Legal Metrology Act, 2009 on the basis of which the manufacture of such is generally subject to Central Excise valuation on an MRP/Retail Sales Price basis in accordance with s 4A of the Central Excise Act, 1944. This is in contradiction to the premise that software supplied digitally is a service. The argument remains that basic operational character, marketability and commercial value of software remains unchanged, whether it is supplied over the counter in a shop or supplied digitally.

2.2. NASSCOM's Tax Concerns

NASSCOM in its pre budget recommendations for the year 2013-2014 suggested that deviations from the existing provisions should be allowed for matters that warrant the adoption of an alternative approach for tax reform. Consultative groups such as the Tax Administration Reform Commission (TARC) should continue to operate. The IT Industry possesses certain specific tax concerns due to its unique business models which aim to overcome geographical distances. Software product companies are practically SME’s which struggle to maintain cash flow due to imposition of additional tax. All firms, including SMEs are forced to hire a specific employee for tax compliance alone. Further, they prefer to pay the deemed penalty rather than opt for litigation due to added costs, which is not sustainable in the long run.

The CBEC’s Guidance Notes dated 20th June, 2012 clarified many issues arising out of the new provisions in the Service Tax law introduced on 1st July 2012. As laid down by the SC in TCS v. State of AP [5], ‘sale’ of prepackaged/ canned/shrink wrapped software would not be a provision of service. NASSCOM’s earlier request for a clarification as to the taxation of onsite services was fulfilled with the guidance notes treating development of onsite software under the category of development of Information Technology Software as a declared service under section 66(e)(d) of the Finance Act.

NASSCOM suggested clarity in the deemed provisions which allow for dual taxation and ambiguity in the characterization of the transaction. VAT should be levied on the product alone and the service tax should only be payable on the additional services rendered, if any. New business models involve the provision of services along with the product which further increase the possibility of dual taxation. Provision of standard software, including license to use such software, whether electronically or on a media, should not be subject to dual levies, and in case VAT is applied, it would not be liable to Service tax. For software transactions which involve both a product and associated services, the services component should be subject to service tax alone, and the product value should be subject to VAT only. Given the stand taken by the Central Government on the treatment of software supplied electronically, it may be clarified that service tax is applicable on sale of software which is downloaded electronically and Central Sales Tax is not applicable on the same if the transaction is interstate transaction. Other recommendations included:

The Finance Act 2012 introduced certain retrospective amendments which are unfair to the industry involving TDS and associated penalties arising out of royalty implications. The introduction of payment of royalty on Internet downloads of software, services of maintenance, upgrade and telephone services has to be aligned with International standards.
The 10% TDS payable by SMEs and startups in the IT Industry is high due to the low profitability of such ventures and the cash flow crunch faced subsequent to such payment due to the need for investment prior to the start of operations in the product development industry. Often, the actual tax liability is lower than the TDS liability, which results in income tax refunds later while reducing liquidity in operations before. NASSCOM suggested reduction of TDS liability and adjusting pending refunds to future TDS liability. Further, banks should offer loans to software companies by treating the pending TDS refunds as book debts taken by the state. The ideal approach would be the complete exemption of the software industry from TDS u/s s 194J of the Income Tax Act.
Section 194J of the Income Tax Act prescribes that TDS @10% has to be deposited on payment made for the acquisition of software for amount greater than Rs 30,000 in a financial year. NASSCOM recommended that the prescribed limit for the computation of the TDS liability is not indicative of the pricing trends in the current business environment and thus the minimum threshold limits be increased to 3 lakh in a financial year. Further, the relevant criteria of setting these limits should be released in the public domain which would enable the industry to share data for the timely updation of the prescribed limits.
Clause 4 of the second explanation to Sec 9(1)(vi) of the Income Tax Act, 1961 states that Royalty would include consideration for the rendering of services which include the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill. Royalty indicates consideration for ‘user rights’ rather than ownership rights. NASSCOM in 2014 stated that Software Ancillary Services such as AMC’s, Upgrade Fees, Subscriptions, etc. which do not involve transfer of rights, or grant of license but involve only payments of consideration for services is deemed to be “Royalty” for the purposes of the Income Tax Act and demanded that a clarification be issued under this regard.
Abatement of 15% is allowed from Retail Sale Price (RSP) to arrive at the value of Packaged Software or Canned Software, for payment of excise duty [6]. This notified abatement of 15% does not take into account the incidence of taxes on the product [7]. The taxes on the product amount to ~22% of the RSP and the notified abatement of 15% is not adequate. NASSCOM recommended that the abatement of 15% allowed under the said notification be increased to 30%. High Packaged/Canned software products are sold through a multilayer dealer/distribution chain through which they are delivered to the ultimate consumer. High trade discounts are incurred due to the presence of multiple intermediaries in the supply chain.
The IT Act in recognition of the compulsions and limitations of the SME and start-ups have notified several thresholds below which provisions are not applicable. Unfortunately, these are not revised and lose their relevance in the evolving business environment. NASSCOM requested for the institutionalization of a periodic review mechanism, which would ensure that the thresholds are revisited at predefined frequencies and altered accordingly.
Review of the foreign tax credit provisions are necessary in light of emerging Indian MNCs. The existing tax treaties need to be reevaluated to delete differential tax treatment discouraging domestic investment and contributing to the increased round tripping in the economy.
A separate regulatory approach with respect to Angel Investments needs to be formulated as they serve as the key source of funding for IT firms in the absence of access to public financial institutions.
NASSCOM has also highlighted multiple procedural issues in its prebudget recommendations for the year 2015-16 [8].
NASSCOM expressed its disappointment over the manner of implementation of the Fringe Benefit Tax bringing a lot of legitimate business expenditure on employee welfare in the tax net, resulting in non-investment in the long term benefit of workers by businesses [9].

2.3. iSPIRT's Tax Concerns

iSPIRT stated that the Indian government by adopting a piecemeal approach to the taxation system in the country has contributed to its increased fragmentation. The present tax structure cannot deal with the evolution of the digital economy in India which is increasingly using innovation in its business models.

All prepackaged software are considered to be goods due to an associated tariff code (ITS/HS Code). All other categories of software, are to be treated as services by default through a logic of exclusion, (other than customized software) by virtue of not being included in the tariff code list. There is no recognition of other models of SaaS, PaaS etc. The central government has not given adequate remedies to the issue of the charging of VAT by the State governments. Even when software is defined as a service, its transfer is often held to be deemed sale as per Article 366(29A) of the constitution. ‘SaaS’ software is taxed only under the service tax component when procured through a service partner, as against service tax plus VAT when procured directly. Differential taxation treatment of the same product/service creates immense frictions for ease of doing business for digital goods and services.

iSPIRT identifies the root cause for such confusion to be the non-recognition of intangibles to be at par with tangibles. Technically, by treating them to be ‘goods’ and subjecting them to the Sale of Goods Act, they cannot be treated as services by definition. However, the result of the piecemeal approach is the non recognition of software products as products (effectively), due to their intangible nature. This can be seen by the imposition of royalty from income derived from the sale of software under the Finance Act 2012, which indicates that the transaction of sale of software is considered to be one of transfer of copyright rather than a sale of product.

iSPIRT gave arguments as to the inefficiency of the proposed GST bill to deal with the taxation issues in the software industry, the bill not taking cognizance of the root cause of absent definition of a digital good which treats intangibles at par with tangibles. Practical challenges will arise due to differences in the value chain of use and consumption of ‘goods’ and ‘services’. The tax structuring is not done exclusively for the either software or the digital business. The tax authorities are prone to provide for differential rates under pressure of lobbying in the presence of new sectors in the industry which leads to amendments of rules and increased confusion. With the non-deletion of Clause (29A) of Article 366 in the proposed constitutional amendment, the concept of sales and deemed sales may be misused or may not give way to the concept of supply as envisaged in the GST Bill. Further, the CBEC is expected to use the existing frameworks even if the GST bill is proposed to be passed to the detriment of the software industry.

iSPIRT’s solution involved the transfer of focus to ‘digital’ products and services. It formulated the COG-TRIP test which can be used to define software products as distinct from software services [10]. Software products would be pervasive in the future and would be an essential component of the ‘digital economy’. Software is not necessarily a standalone computer program and may work with either data, audio or video products. Hence software products, sounds, images, data, documents or combinations of them may exist as a ‘digital product/goods’. This ‘digital economy’, would be overwhelmed with trade of not only ‘digital goods’ and ‘digital services’, but also the trade of ‘right to use’ or ‘transfer of right to use’ just as there is ‘deemed sales’ or ‘transfer of right to use’ of tangible goods. Due to inevitable inseparability of software and digital products, the taxation issues of Software product industry should be dealt in a unified ‘digital economy’ domain to prevent the formulation of a temporary, patchwork solution. Focusing on ‘digital’ will provide strategic solution to the problem at policy formulation level.

iSPIRT thus proposed a ‘digital goods’ and ‘digital services’ definition in the tax system [11]. These “digital goods,” or intangible goods have to be awarded the status of “goods” as defined in Article 366(12) of the Constitution. The digital goods, though intangible in nature, exhibit all properties of tangible goods generally acceptable in legal parlance viz. durability (perpetual or time bound), countability (number of pieces, licenses or users etc.), identifiability (standardised), movability and storage, ownership (IP or right to use), reproducibility, and marketability/tradability using an MRP as per the proposed COG TRIP test formulated by ISPIRT. This would be further related to the Sale of Goods Act 1930 and related article 366(29A) aspects. This would also be beneficial for the SaaS Industry which can now be defined under the product (digital goods) category as an industry. Once SaaS is recognized as Product (intangible goods) the next issue to be solved is asking for one single clear tax on a transaction be it “goods” or “services” based on the transaction. Other recommendations included the inapplicability of ‘royalty income’ under the garb of attached ‘copyrights’ in the Income Tax act to digital goods. This binding of ‘royalty income’ on software and ‘intangible/digital’ goods is a bottleneck to trade in a digital economy. Also, the tax system has to be digital in all aspects, i.e., ability to track transactions, levy of a clear single tax and digital collection—including taxes on international online transactions. it also recommended the commencement of taxation of online B2C sales by foreign companies.

iSPIRT expressed its disappointment in its post budget response over no attention being given to easing taxation norms of software companies where there is significant friction, the confusion on “goods” verses “service” tax on online downloads, TDS on sale of Software products and competition from foreign selling B2C products without any tax in India. Tax relaxation should be provided to startups on the basis of profitability rather than exemption in the initial 3 years of operations, when startups may not possess tax liability anyway. Loss making startups should not have to part with liquidity in the form of TDS payments which get refunded later. Relaxation in capital gains tax should not be just confined to investment in government schemes.

iSPIRT in its article dated November 24, 2014 [12] briefly explained the problem of duality of taxes on services. The constitutional framework regarding Indirect Taxes specifies that the manufacturing and services should be taxed by the centre and anything that is traded should be taxed by the states. Services are not tradable in nature in contrast to ‘rights to services’ which are tradable commodities. An example would be a vendor selling a recharge coupon. The actual service would be provided by the Telco, he is just selling the right to service. This would be tradable until the service is consumed. This transaction qualifies for both Service tax, imposed by the centre and the tax on tradable commodities imposed by states. ISPIRT had not yet proposed the digital goods and services definition to resolve these issues and its budget recommendations were similar to those of NASSCOM. It proposed that clarity is needed on the issue of tradability of service as “goods” and “service delivery” as “service”. Only after such clarity is achieved, the GST would be able to resolve the issues of duality of taxes.

Its article classified the taxation issues into direct and indirect.

Direct Tax Issues:

According to the Finance Act 2012, any income arising out of the sale of software amounts to royalty, irrespective of the medium of sale making the said transaction liable for TDS deduction under s 194J. All software sold carries a license for end use without transfer of copyright in the software. The software product and the associated license is sold as a tradable commodity and not as a copyright. International practice treats the sale of software depending on how the rights/copyrights are transferred. This rights based approach shall distinguish between the nature of rights transferred in exchange for consideration.
A transfer of “copyright” would indicate that the payer is permitted to commercially exploit the copyright that would otherwise be the sole privilege of the copyright holder and would constitute infringement of copyright without such transfer. The payer, now the copyright holder, is permitted to reproduce, copy, modify, adapt or prepare derivative works based on the copyrighted software for sale or profit. This transaction is subject to payment of royalty in contrast to a transaction which only involves the transfer of a “copyrighted article”. The payer in this case is only permitted to operate the software product for personal consumption or for use within his business operations. Such payment should be treated as business income and not as royalty.
iSPIRT proposed the repeal of the said amendment and introduction of provisions which differentiate between ‘copyright’ and ‘copyrighted articles’ for the purposes of determination of royalty impositions. Further, it proposed specific exclusion through the addition of an explanation to the deemed provision for income arising from the sale of ‘copyrighted articles’ including shrink wrap software, software licenses, downloadable software, software bundled with hardware. It also recommended that the term copyright be defined in the IT Act for royalty purposes to remove dependency on sections 14 and 52 of the Indian Copyright Act, with the exception of the applicability of the Indian Copyright Act in case of copyright infringement. If software product companies are being subject to a TDS there should be Tax credits available on service tax. It also stressed on the need for a mechanism to speed up the process of TDS refunds.

Indirect Tax Issues:

iSPIRT demanded the amendment of the Mega Notification No. 25/2012 dated June 6, 2012 to provide that electronic delivery of packaged software through telecommunication networks are excluded from the ambit of service tax. Alternatively, an explanation could be attached to s 66E of the Finance Act to provide that the development of software under subclause (d) is “only in relation to customized software and any packaged software delivered online or downloaded on the Internet is specifically excluded from the provisions of section 66E and should not be chargeable to service tax.” Additionally, the “Taxation of Services: an Educational Guide” dated June 20, 2012 issued by the Central Board of Excise and Customs needs to be amended along with the addition of an explanation to chapter 85 of schedule I of the Central Excise Tariff Act stating that packaged software delivered online or downloaded from the internet is also included in the meaning of ‘IT Software’ for the purposes of heading 8523.
iSPIRT made the same recommendation as NASSCOM as to the inadequate rate of abatement from RSP to arrive at the value of packaged/canned software, falling under the Central Excise Tariff Heading, 85239020 of the Central Excise Tariff Act, 1985, for payment of excise duty under s 4A of the Central Excise Act, 1944. It recommended that serial No. 93A in Notification No. 49/2008 dated December 24, 2008 be amended to increase the abatement from the existing 15% to 35%.

3. Concerns with Respect to the Regulatory Mechanism for E-Commerce (B2B Commerce)

The existing FDI norms in India do not permit FDI in multi-brand retail companies. The new rules indicate that 100% FDI is permitted in online retail of goods and services under the ‘market place model’ through the automatic route, rendering legality to the many present e-commerce businesses in India. Since the business entity in focus is only an intermediary which provides the sellers of the goods with a platform for the sale of their products, online retail in the form of the inventory model remains illegal, excepting single brand retail [13]. The present FDI policy aims to convenience sellers who can take advantage of the services of e-commerce giants including, but not confined to, warehousing, logistics, order fulfillment, call centre and payment collection [14].

NASSCOM has suggested keeping the FDI norms for B2C Commerce at par with B2B Commerce. Further, the stipulations in the circular issued in 2015 by the DIPP which provided for the same conditions on SBRT applicable to brick and mortar stores be applicable to online stores which provided for 30% sourcing from local sources for retailers which had more than 51% FDI was opposed by NASSCOM, which reiterated that unviable regulations only restrict trade and development. It stated that e-commerce can be aligned to the objectives of national development by providing impetus to manufacturing sector, order consolidation and distribution, facilitating and supporting SMEs, improving outreach and access to buyers/sellers, bringing traceability and transparency in transactions, empowering consumers with information and data and finally creating new job opportunities. E-commerce has only enabled the creation of unique businesses which has created demand resulting in greater private consumption and market demand in inaccessible areas in consonance with the ruling governments ‘Make in India’ scheme. Further, a transparent audit trail and the resulting efficient tax collection can be better ensured through the medium of online banking and credit cards.

As companies have no control on consumer buying behaviour and will have no say in the choices made by them, there should be no mandate to conclude sale of products sourced from India. Instead, companies will continue to offer local products on their website, but linking it to buying behaviour would be unfair and difficult to comply with. Hence, the policy should stipulate that companies should offer 30% locally sourced products, without any criteria related to sourcing from SMEs.

The government should recognize and support the growth of e-commerce companies who are dedicated to Indian ethnic products, helping MSMEs and artisans to expand their outreach. Presently, the FDI in retail policy gives power to the states to decide. In the context of e-commerce, any geographical limitations will go against the basic tenet of outreach and market access that e-commerce promises. Further any restrictions imposed by states will serve to deprive it from the inherently efficient processes and infrastructure development opportunities, contributing to employment and revenue generation opportunities. Market development is an important priority for the Internet economy and is akin to infrastructure development in the physical world. NASSCOM has been actively engaging with the government to evolve a policy concerning Foreign Direct Investment (FDI) in e-Commerce that encourages smaller technology players to foray into the market.

It recommended:

Allowing 100 per cent FDI in B2C e-Commerce, as in the case of B2B e-Commerce.
Removing the ‘minimum investment threshold’ and conditions of investment in the back-end since e-Commerce requires investment in technology and supply chain for promised efficiencies. Since there is no investment required in creating physical store fronts, there is no need for such a stipulation.
Allowing existing e-Commerce firms to raise capital, in addition to permitting investment in greenfield projects.
Removing geographical limitations that go against the basic tenet of outreach and market access that e-Commerce promises.

NASSCOM also suggested the following restrictions to exclude organisations that are:

Receiving orders on the telephone, facsimile or conventional email.
Are not complying with the rules on FDI in retail in toto.
Pure play e-Commerce ventures that are foraying into physical retail, but not complying by the rules on FDI in retail.

4. Other Policy Recommendations

iSPIRT stated that the complex procedures for share allotment etc should be revised to enable the software companies to concentrate on core business functions.
In May 2016, ISPIRT cautioned the use of patents in India, citing the overuse of patents in USA with corporations whose sole purpose of existence is to register patents and demand royalty payments from unsuspecting users. If India allows software patents under the Patent Cooperation Treaty, it would have to give priority to the existing patents filed in other countries and would enable MNCs to exclude Indian companies from using their ‘inventions’. To enable the Indian software industry to innovate without worrying about patent lawsuits, software patents should not be permitted. iSPIRT lauded the revised guidelines issued by the Indian Patents Office in 2016 which prevent the digital colonization of India by MNCs. order issued by the Controller General of Patents, Designs and Trademarks dated February 19, 2016 finalising the guidelines for Examination of Computer Related Inventions lays down clear tests for recognizing patents.
India has to build a favourable business environment to retain the software products business and its intellectual property, which is highly mobile, within its domestic territory. Among the solutions are liberalized ownership rules with exemptions from regulatory filings and specific regimes (FDI/VCI/FII, etc.), specific exemptions from capital gains and dividend taxes for investors and tax exemption on foreign income of Indian software product companies. The idea of a fully liberalized virtual special economic zone for ownership and operation of software product companies, with India signing an iron-clad double-taxation avoidance agreement should not be rejected.
As was the case with Flipkart, larger buyers and clients withhold payment intentionally until suppliers are forced to grant unreasonable discounts. Large buyers are aware that suppliers would not act upon their rights to preserve business relationships and to avoid unnecessary time consuming and expensive litigation. According to iSPIRT, 98% of Indian SMBs extended goods and services on credit to their clients in 2015 leading to a situation wherein the most exclusive businesses can demand payments upfront. Giving the example of IMAI, which has proposed the establishment of a payment recovery mechanism for the digital communication service industry which would enforce meaningful out of court payment protections, iSPIRT has asked for solutions to the problem at hand in its article dated May 18 2016.
iSPIRT formulated a Stay-in-India checklist as a part of its Startups Bridge India campaign which identifies 34 key issues to be resolved to prevent startups from relocating abroad [15]. The Checklist includes requests for favourable IP tax regime, harmony in taxation of listed and unlisted securities, relaxed external commercial borrowing norms, faster incorporation and liquidation processes, and permitting convertible notes, indemnity escrows, and deferred consideration in foreign investment transactions.
NASSCOM applauded the National Intellectual Property Rights policy, approved by the cabinet on 13 May 2016 [16]for comprehensively covering all aspects of the domain including IPR awareness, generation, legislative framework, administration, commercialization, enforcement and adjudication, human capital and incorporating the suggestions of the associations on IPR policy made last year. According to the policy, the Department of Industrial Policy and Promotion (DIPP) would become the nodal point department for all IPR related developments in India, while respective ministries or departments will be responsible for actual implementation. NASSCOM commented that this single umbrella approach will help leverage linkages between various IP offices. The proposal for a simple loan guarantee scheme to encourage start-ups based on IPRs as mortgage-able assets; financial support and securitization of IP rights for commercialization by enabling valuation of IP rights as intangible assets, the promotion of free and open source software and the support for IPR generation for information and communications technology , including those relating to cyber security for India are welcome. NASSCOM stated that it would partner with DIPP in the modernization efforts support an innovation led Industry in India.
NASSCOM in 2016 urged the SC to reconsider the ban on diesel taxis in the capital highlighting unresolved issues of the safety of the women workforce working in the IT industry and the lack of an adequate CNG infrastructure. Stating that the ban may cost the industry $1 billion, it suggested a deferred timeline for shifting diesel cabs to CNG or a phased implementation.

5. Endnotes

[1] The following activities are ‘declared services’ under section 66E of the Finance Act:

Section 66E (c) of the Finance Act, 1994 - Temporary transfer or permitting the use or enjoyment of an intellectual property right.
Section 66E(d) - Development, design, programming, customization, adaption, upgradation, enhancement, implementation of information technology software. (IT software has been defined in section 65B of the Act as “any representation of instructions, data, sound or image, including source code and object code, recorded in machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment.)
Section 66E(f)- Transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer of right to use such goods.

[2] Article 366(29-A) (b) of the Constitution states that a tax on the sale or purchase of goods includes a) a tax on the transfer of property in goods, b) a tax on the delivery of goods on hire purchase or any system of payment by installments, c) a tax on the transfer of the right to use any goods for any purpose, and d) a tax on the supply of goods. Such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made.

[3] State of A.P. v. Rashtriya Ispat Nigam Ltd. MANU/SC/0163/2002, BSNL v. UOI, MANU/SC/1091/2006: 2006 2 STR 161 S.C.

[4] The petitioner in the above case relied on TCS v State of Andhra Pradesh, (2005) 1 SCC 308 which held that software are goods, whether customized or non-customized, to argue that the Finance Act 2012 was unconstitutional to the extent that it imposed service tax on software. Since the states were imposing VAT on such transactions, the consequent levy of service tax by the Central government was unconstitutional. The dominant intention of the parties, as laid down in the BSNL case, would not have to be examined in such a situation. The Madras HC agreed with the contention that software is a ‘good’, as it is an article of value having regard to its utility and is capable of transmission, delivery, storage, possession and of being brought and sold and did not deviate from the position of law as laid down in the TCS case, its own earlier decision in the case of Infosys Technologies Vs. CTO (2008) TIOL 509 as well as the decision of the Karnataka High Court in Antrix Corporation Ltd. Vs. Assistant Commissioner of Commercial Taxes (2010) TIOL 515.

[5] On making and marketing copies of software, the transaction would be subject to sales tax despite the retention of the copyright with the originator of the programme. The sale is not just of the media, but of the Intellectual Property stored on the media. As it is impossible to separate the transaction, the sale of software would be governed by the Sale of Goods Act 1930, being a ‘good’ under law. Goods sold can be both tangible, intangible/incorporeal. The test is whether they are capable of abstraction, consumption, use, transfer, transmission, delivery, storage, possession etc, fulfilled in the case of software.

[6] This was notified in 2008, Serial No 93A of Notification No 49/2008-CE (NT) dated 24.12.2008, for valuation under Section 4A of the CEA, 1944.

[7] VAT/CST rates ranging from 5.5% to 6.6%; Octroi/Entry Tax of 5.5% in State of Maharashtra; excise duty from 10% ad valorem and Education Cess.

[8] See: http://www.nasscom.in/sites/default/files/policy_update/NASSCOM%20pre-budget%20recommendations%20-%20Procedural%20issues.pdf.

[9] See: http://articles.economictimes.indiatimes.com/2005-09-05/news/27476122_1_fbt-nasscom-kiran-karnik.

[10] Given below is the framework of COG-TRIP:

1. Countability - Number of licenses/users/subscribers
2. Ownership and intellectual property rights
3. Qualification as an intangible good
4. Tradability: The software products (goods) can be sold through different delivery modes
5. Right of service / Right of Use
6. Identifiability
7. Production/development cost: All software production costs are capitalized and subsequently reported at the lower of unamortized cost or net realizable value

[11] DIGITAL GOOD: The term 'digital good' means any software or other good that is delivered or transferred electronically, including sounds, images, data, facts, or combinations thereof, stored and maintained in digital format, where such good is the true object of the transaction, rather than the activity or service performed to create such good.

DIGITAL SERVICE: The term 'digital service' means any service that is provided electronically, including the provision of remote access to or use of a digital good.

For purpose of above definitions, the term:

'Digital Goods' means 'Goods' as defined in 366(12) of the Constitution,
'Digital service' means a 'service' and that which is not a 'Digital Good,'
'Delivered or transferred electronically' means the delivery or transfer by means other than tangible storage media,
'Provided electronically' means the provision remotely via electronic means,
'Software' is a representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment, and
'Software Product” is a standardised set of such software bundled together as a single program or a Module that directs computer's processor to perform specific operations, exhibiting the properties of an intangible good that can be traded.

EXPLANATORY NOTE: In legal parlance, the 'goods' exhibit the following properties as established under the COG TRIP test: 1) Durability - perpetual or time bound, 2) Countability – traded commodity can be counted as number of pieces, number of licenses used, number of users etc., 3) Identifiability – identified as a standardised product, 4) Movability and storage – can be delivered and stored and accounted as an inventory, 5) Ownership of the right to use, 6) Produced/reproduced through a process, and 7) Marketable/tradable - can be marketed and sold using standard marked price (except when volume discounts, bid pricing and market promotion offers are applicable).

[12] See: http://pn.ispirt.in/tax-challenges-of-the-spisoftware-product-industry-and-budget-recommendations-made-by-ispirt/.

[13] The guidelines issued in November 2015 permitting a select 15 categories in Single Brand retail to sell their products online were further altered in March 2016 by the Department of Industrial Policy and Promotion to allow single brand retail by brick and mortar stores operating in India and Indian manufacturers. The impact of FDI policy on businesses can be understood with cases of alteration of business structure and distancing of e-commerce companies with their subsidiary sellers on allegations of violation of existing norms. The DIPP submitted to the Delhi HC that the ‘market place’ business models adopted by Amazon, Flipkart and Snapdeal etc were not recognized under law as they had resorted to direct sales to customers. Further, the legality of promotional funding would also be questioned on the ground that an intermediary cannot facilitate any scheme of discounts by bearing the difference in the price of the goods sold as to that extent, it is acting as the seller. This would not be in the interests of the consumers, who could earlier take advantage of the various discounts offered in the form of marketing cost reimbursement, bonus schemes etc. With such strong policies, the possibility of equality of prices between online and brick and mortar stores cannot be discarded.

[14] http://www.livemint.com/Politics/hglep85yZOQzChj6KRrrCK/Govt-allows-100-FDI-in-ecommerce-marketplace-model.html.

[15] See: http://pn.ispirt.in/sign-startup-bridge-petition-and-promote-stay-in-india-checklist/.

[16] See: http://articles.economictimes.indiatimes.com/2016-05-14/news/73083932_1_nasscom-software-industry-body-ip-rights.

6. Author Profile

For more details visit https://cis-india.org/raw/policy-shaping-in-the-indian-it-industry-recommendations-by-nasscom-and-ispirt-2013-2016

Plenary Talk at Jyothi Nivas College Research Symposium

sneha — 2018-10-03T16:46:03Z

I gave a plenary presentation on new reading and writing practices in the digital context, and emerging questions for digital humanities and literary studies at a research symposium organised by Jyothi Nivas College, Post Graduate Centre, on September 28, 2018.

Click to download the Invite

For more details visit https://cis-india.org/raw/plenary-talk-at-jyothi-nivas-college-research-symposium

Platforms, Power, and Politics: Perspectives from Domestic and Care Work in India

Aayush Rathi, and Ambika Tandon — 2021-07-07T15:19:37Z

CIS has been undertaking a two-year project studying the entry of digital platforms in the domestic and care work in India, supported by the Association for Progressive Communications as part of the Feminist Internet Research Network. Implemented through 2019-21, the objective of the project is to use a feminist lens to critique platform modalities and orient platformisation dynamics in radically different, worker-first ways. Ambika Tandon and Aayush Rathi led the research team at CIS. The Domestic Workers’ Rights Union is a partner in the implementation of the project, as co-researchers. Geeta Menon, head of DWRU, was an advisor on the project, and the research team consisted of Parijatha G.P., Radha Keerthana, Zeenathunnisa, and Sumathi, who are office holders in the union and are responsible for organising workers and addressing their concerns.

The Executive Summary for the project report is below.

The full report, ‘Platforms, power, and politics: Perspectives from domestic and care work in India’, can be found here.

The press release can be found here.

Introduction

Paid domestic and care work is witnessing the entry of digital intermediaries over the past decade. More recently, there has been tremendous growth of digital platforms. This holds the potential to impact millions of workers in the sector, which is characterised by a long history of informality and exclusion from rights-according legal frameworks. Digital intermediation of domestic and care work has been a space of high-growth, but also high-attrition. In India, order books of digital platforms providing domestic and care work services were reported to have been growing by upto 60 percent month-on-month in 2016. This is expected to shift the organisation of workers and employment relations profoundly.

Broadly, the discourse on digital platforms providing home-based services can be summarised as follows: proponents argue that digitisation will act as a step towards bringing formalisation to the sector, while critics argue that platforms could replicate the exploitation of workers by further disguising the employer-employee relationship. Similar debates around lack of protections and precarity have also taken place in other occupations in gig work such as transportation and food delivery. In fact, the similarity in precarity and the informal nature of this relationship across gig work and domestic work has led to domestic workers being labelled the original gig workers. Domestic work is a particularly vulnerable and unprotected sector, which makes work in the sector qualitatively different from most other sectors in the gig or sharing economy.

Through a feminist approach to digital labour, our project aimed to examine the dynamics of platformisation in, and of domestic or reproductive care work. Our hypothesis was that platforms are reconfiguring labour conditions, which could empower and/or exploit workers in ways qualitatively different from non-standard work off the platform. In order to interrogate this further, we studied several aspects of the work relationship, including wages, conditions of work, social security, skill levels, and worker surveillance off platforms.

Methodology

We borrowed from ethnographic methods and feminist principles to co-design and implement the research tools with grassroots workers and organisers. Between June to November 2019, we conducted 65 in-depth semi-structured interviews primarily in New Delhi and Bengaluru. A majority of these were with domestic workers who were seeking or had found work through platforms. We also did interviews with workers who had found work through traditional placement agencies to compare our findings, and with representatives from platforms, government labour departments, and workers collectives. Of the workers we interviewed, a majority were women, but men were included as well. Interviews in New Delhi were undertaken by CIS, while interviews with workers in Bengaluru were undertaken by grassroots activists in Bengaluru, affiliated with the Domestic Workers Rights Union (DWRU).

In implementing the data collection approach, we employed feminist methodological principles of intersectionality, self-reflexivity, and participation. The methodology draws on standpoint theory, which encourages knowledge production that centres the lived experiences of marginalised groups. We were acutely aware of our own positionality as high income, Savarna researchers studying a sector dominated by Dalit, Bahujan and Adivasi women from low income groups. This power differential was softened partially by involving DWRU through the course of the project. Workers across both field sites were also interviewed in spaces familiar to them, most often their homes, in languages that they were comfortable with including Hindi, Kannada, and Tamil.

Feminist principles also instrumental during the data analysis, with focus on intersectionality and self-reflexivity. We highlighted the ways in which inequalities of gender, income, migration status, caste, and religion are replicated and amplified in the platform economy. In particular, we discussed the impact of the digital gender gap in access and skills on workers’ ability to find economic opportunities.

Findings

Our typology of platforms mediating domestic work finds three types of platforms – (i) marketplace, or platforms that list workers’ data on their profile, provide certain filters for automated selection of a pool of workers, and charge a fee from customers for access to workers’ contact details, (ii) digital placement agency, or platforms that provide an end-to-end placement service to customers, identify appropriate workers on the basis of selection criteria, and negotiate conditions of work on behalf of workers, and (iii) on-demand platforms, or companies that provide services or ‘gigs’ such as cleaning on an hourly basis, performed by a roster of workers who are characterised as ‘independent contractors’.

When it comes to the role played by platforms in determining employment relations, there is a wide variation within and across platform categories. There are both weak and strong models of intervention. On one end of the spectrum are marketplaces, with minimal intervention in the recruitment process, and on the other on-demand platforms, that exact control over each aspect of work. Digital platforms reconfigure the conception of intermediaries in the domestic work sector, functioning as next-generation placement agencies. All three platform types contain aspects that provide workers agency, as well as those that reinforce their positions of low-power. Platform design impacts the role platforms play in setting conditions of work, but does not determine it entirely.

(Re)shaping the terms of work
Across the three types of platforms, wages are slightly higher than or matching those of workers off platforms. Some marketplace platforms have incorporated features to nudge customers towards setting higher wages, such as enforcing minimum wage standards, or informing customers of expected wages in their locality. Conversely, on-demand platforms charge a high rate of commission from workers, despite refusing to recognise them as employees. This indicates that this is a misclassification of an employment relationship, given that workers are unable to set their own conditions or wages for work. Despite the high rates of commission and appropriation of labour by platforms, on-demand workers earn higher wages than workers on other platforms. The relatively high wage is a result of marketing on-demand cleaning as professionalised and more skilled than day-to-day cleaning. Tasks in the sector continue to be distributed along the lines of gender and caste, as has historically been the case. Dalit, Bahujan and Adivasi women are more likely to take up work such as cleaning and washing dishes, while men and women across castes are equally distributed in cooking work. Women dominate tasks such as elderly and childcare, as in the traditional economy. Workers in professionalised tasks such as deep cleaning that requires technical equipment and chemicals are almost entirely men.

Digital divides and workers’ agency
We find that workers are primarily onboarded onto platforms by learning about it from other workers, through onboarding camps held by platforms, or offline advertising by platforms. Such in-person onboarding techniques allows workers with no digital access or literacy to register themselves on marketplace platforms and digital placement agencies.

However, we find that low levels of education and digital literacy continue to impact platformed labour by creating a strong informational asymmetry between workers and platforms. For instance, we find that women workers from low income communities have very little information about how platforms work, causing deep distrust. Workers with digital devices and literacy (and therefore a relatively better understanding of the functionality of the platform), physical mobility and the resources to bear indirect costs that were outsourced to them were at a significant advantage in finding better-paying jobs. Workers who were seeking flexibility and were not necessarily dependent on the platform for their primary income were also better placed than those entirely dependent on platforms. Women workers tended to be disadvantaged on all these counts, limiting their agency and capacity to reap the benefits of the platform economy.

Across the three types of platforms, systems of placement and ratings add to the information asymmetry, as workers are not aware of the impact of ratings on their ability to find work or charge better wages. Ratings and filtering systems also hard-code the impact of workers’ social characteristics on their work. Workers are unable to exercise control over their data, further undermining their agency vis-a-vis platforms and employers. We identify a clear need for collective bargaining structures to protect workers’ rights, although platformed domestic workers remained distant from both domestic work unions and emergent unions of platform workers in other sectors.

Intersectionalities of formalisation
We find that inequalities of caste, class, and gender that have historically shaped the sector continue to be replicated or even amplified in the platform economy. What remains clear is that platforms in the domestic work sector adopt the logics of this sector, more than the converse. Platformisation is conflated with formalisation, and it is within this vector, from complete informality to piecemeal formalisation, that platforms operate. Labour benefits do not take the form of labour protections or welfare entitlements that are the central function of formalisation processes. Instead, the so-called benefits are intended to transform domestic workers to participate within the logics and vagaries of the market.

Policy Recommendations

Recognise and implement labour protections for domestic workers
Domestic workers have historically occupied the most vulnerable positions in the workforce, with limited legal protections. Exposed to the regulatory grey areas that platforms operate in, this doubly exposes domestic workers to precarious conditions of work. Despite an avowed move towards formalisation of domestic work, platform-mediated labour continues to retain characteristics of informal labour, even heightening some.

If pushed to do so, platform companies can be instrumental in resolving some of the implementation challenges that governments have faced in enforcing legislative protections sought to be made available to domestic workers. Platforms have databases of workers, which can be used to mandatorily register them for social security schemes offered by the government. This data can also be used for better policy making, in the absence of reliable statistics particularly on migrant workers in the informal economy.

Reduce the protective gap between employment and self-employment
The (mis)classification of “gig” work within labour law frameworks is still a matter that continues to be hotly debated within policy practitioners, legal scholarship, and civil society actors. Three positions, in particular, have been taken—treating gig workers as employees, independent contractors, or occupying a third intermediate category. More recently, there have been some legal victories guaranteeing employment protections and increasing platform companies’ accountability. However, these successes have been more visible in Global North jurisdictions.

Regardless of the resolution of these ongoing debates over employment status, labour frameworks should provide some universal protections to all categories of labour. Such protections must include universal coverage of social security, in addition to rights such as freedom of association, collective bargaining, equal remuneration and anti-discrimination. Policies geared towards achieving this objective would be significant in reducing the protective gaps between different categories of labour, and would particularly help historical and emerging occupational categories of workers such as “gig” workers and domestic workers.

Recognise the specific challenge(s) and potential of platformisation of domestic work
Platforms hold the potential of acting as effective facilitators in informal labour markets. Even when they do not replace existing recruitment pathways, they provide alternate ones. Workers were more likely to register on a platform if they were entering the domestic work labour market recently (often distress and migration driven), or had not enjoyed success with informal, word-of-mouth networks. However, platforms also heighten labour market insecurities, and create new ones. These potential risks need to be specifically recognised through appropriate frameworks, such as social security, discrimination law and data protection.

Tailor policy-making to platform models
We identify three types of platforms, each of which intervene to varying degrees in the work relationship. We recommend that digital placement agencies and marketplace platforms be registered with governments and enforce basic protections for workers such as provision of minimum wage, preventing abuse (including non-payment of wages) and trafficking. On-demand companies on the other hand, must be treated as employers, and workers be accorded employment protections including social security.

In addition to rights-based policy actions, legal-regulatory mechanisms geared towards mitigating the precariousness of platform-based work are required. This can take the shape of clarifying and expanding existing legal-regulatory formulations, or preparing new ones. Such policy making should factor in the power and information asymmetry between domestic workers (and gig workers, generally) and platforms.

Further, in the absence of health or retirement benefits, risks and indirect costs of operations are shifted from employers to workers. For instance, workers provide capital in the form of tools or equipment, support the fluctuation of business and income, and can be ‘deactivated’ from an application as a result of poor ratings or periods of inactivity. Any regulation aiming to extend employee status should mandate platforms to support such indirect costs.

Related Publications

1. Research notes with reflections from union members.
2. The event report from a stakeholder consultation with workers, unions, companies and government representatives.
3. A reflection note on the participatory approach taken by the project.
4. A paper with a comparative analysis of the policy landscape on domestic work in the platform economy.

For more details visit https://cis-india.org/raw/platforms-power-and-politics-perspectives-from-domestic-and-care-work-in-india

Platforms, Power and Politics: Digital Labour in India

ambika — 2021-07-20T02:42:47Z

The Centre for Internet & Society (CIS) invites you to a webinar wherein it will launch and present four research reports on digital labour in India. The webinar will be hosted on July 28, 2021 at 5 p.m. (IST) / 11.30 a.m. (UTC)

Click here to register for the Event Now

Download the brochure of the Event here

Few recent developments in labour and employment have attracted as much attention as the expansion of platform economies. Spanning a range of services and industries, digital platforms have become a permanent fixture in upper-class urban consumption in India.

In this webinar, we will launch and present four research reports on digital labour in India, hosted at the Centre for Internet and Society. Together, they uncover aspects of labouring in three dominant industries of platform work: logistics, transportation, and domestic and care work. These works were supported separately by the Azim Premji University and Foundation, and the Feminist Internet Research Network (incubated by the Association for Progressive Communications).

Informed by deep ethnographic work, these reports unpack the contours of power, control and resistance that shape the experience and outcomes of working for digital platforms. The reports arrive at the ways in which platforms, as moving techno-social assemblages [1] distribute risk and reward in ways that implicate the livelihoods, agency, and bargaining power of actors across digital platforms’ value chains.

Each of these reports also contributes towards developing a southern understanding platform work. In contexts where there is an increasing reliance on technology providers for developmental outcomes and provision of public services, and informality is the dominant labour market structure, what does it mean to work on digital platforms? By situating the histories of informal work in India, and the intersectional identities constituting informality, these reports highlight how digital platforms can both reinforce and reorient the transaction of informal service work.

With restrictions on public mobility and the “hygiene theatre”[2]resulting from the outbreak of covid-19, digital labour platforms have sought to entrench their position in urban India as providers of ‘essential services’. As digital platforms gain centre-stage in India’s various marketplaces, it becomes all the more urgent to collectively reflect upon languages of strategic intervention that can enable a worker-first and southern imagination of digital platform work, and grassroots as well as policy thought around it.

We invite researchers, practitioners, activists and students from across disciplines to join us in this venture.

The event will be segmented into 4 presentations (of 10-12 minutes each), with space for discussion and feedback at the end of each presentation. The detailed agenda, and a reading list are provided below.

Agenda

5.00 p.m.: Introduction

5.05 p.m. Session 1: Perspectives from platformisation of domestic and care work in India - Ambika Tandon and Aayush Rathi, Centre for Internet and Society

5.25 p.m.: Session 2: Promise and prescriptions in the platformisation of food delivery work in Mumbai - Simiran Lalvani, University of Oxford

5.45 p.m.: Break

5.50 p.m.: Session 3: ‘Taxi’ nahi chalata hoon main (I don’t drive a Taxi): Flexibility and risk in the Ridehailing platform economy in Mumbai - Anushree Gupta, IIT Hyderabad

6.10 p.m.: Session 4: The unbearable lightness of being: Performing precarious cab-driving in Delhi - Sarah Zia, Independent researcher

6.30 p.m.: Discussion and Closing

Moderator: Noopur Raval, AI Now

Reading List

Ambika Tandon and Aayush Rathi (2021). Platforms, Power and Politics: Perspectives from Domestic and Care Work in India.
Through exhaustive platform-mapping and feminist ethnographic work, the authors uncovers the implications of digital platforms’ operations on domestic and care workers’ civil liberties, social protection, and gainful work outcomes. Access the full report here.
Simiran Lalvani (2019). Workers’ fictive kinship relations in Mumbai app-based food delivery.
This essay unpacks the kinship term bhai (brother) in order to understand the implications of such kinship sedimentations on food delivery work in Mumbai. Complicating the notion of an atomised worker, it details how having a fictive kinship ties with a bhai eases entry to platform work, upon joining ties guide negotiation with the discipline imposed by the employer and reflects on the experience of women workers. Read the essay here.
Sarah Zia (2019). Not knowing as pedagogy: Ride-hailing drivers in Delhi.
Ride-hailing platforms have “disrupted” public transport in India since their arrival but what hasn’t received enough attention is how these platforms create a deliberate regime of information invisibility and control to keep the drivers constantly on their toes which works to the companies’ advantage. This essay explores how the lack of transparency around algorithmic structures not only prohibits drivers from knowing completely and surely about their work (“why did I get this ride?”, “why did my ratings drop?”) but also how they build tactics of coping and earning from a place of unknowing. Read the essay here.
Anushree Gupta (2019). Ladies ‘Log’: Women’s Safety and Risk Transfer in Ridehailing.
Gig work produces new risks and safety concerns that require new mediations and negotiations. This post outlines the gendered cityscapes that drivers in the ride hailing sector navigate on an everyday basis. Building on insights from fieldwork in the ridehailing economy in Mumbai, the essay argues that drivers rely not only on their spatial knowledge of the city, but also on social knowledge that genders social exchange, predicates identities and draws boundaries. Analysing women’s presence as workers and passengers/customers, the author highlights the figure of the woman and the gendered forms of labour that underpin gig workers’ everyday realities. Read the essay here.
Noopur Raval (2019). Power Chronography of Food-Delivery Work.
This essay presents the observations around the design of temporality within app-based food-delivery platforms in India. It draws on semi-structured interviews by field-researcher Rajendra and his time spent “hanging out” with food-delivery workers who are also often referred to as “hunger saviors” and “partners” in the platform ecosystem in India. Read the essay here.
Simiran Lalvani (2021). Sexual contracts of app-based food delivery: An examination of social reproduction through feeding and being fed in Mumbai, India.
What happens to socially reproductive norms of feeding when apps seem to democratise work? How does this work mediate the tension between workers’, consumers’ choices and the prescription of dominant norms about feeding and being fed? This paper examines the socio-cultural burdens and risks that arise for workers and customers through 3 interrelated aspects – (i) household requirements of food delivery work, (ii) the definition, social meanings and anxieties associated with eating out and (iii) how platforms make anxiety inducing outside food popular, if not palatable. Read the chapter here.

[1] Edwards, D.W. and B. Gelms. (2018). ‘The rhetorics of platforms: Definitions, approaches, futures’, Present Tense: Special Issue on the Rhetoric of Platforms, 6(3).

[2] Thompson, D. (July 27, 2020). Hygiene Theater Is a Huge Waste of Time. The Atlantic. Available at https://www.theatlantic.com/ideas/archive/2020/07/scourge-hygiene-theater/614599/

For more details visit https://cis-india.org/raw/platforms-power-and-politics-digital-labour-in-india

Platformisation of Domestic Work in India: Report from a Multistakeholder Consultation

tasneem — 2020-02-17T09:46:52Z

On November 16, 2019, The Centre for Internet and Society invited officials from the Department of Labour (Government of Karnataka), members of domestic worker unions, domestic workers, company representatives, and civil society researchers at the Student Christian Mission of India House to discuss preliminary findings of an ongoing research project and facilitate a multistakeholder consultation to understand the contemporaneous platformisation of domestic work in India. Please find here a report from this consultation authored by Tasneem Mewa.

Report from the consultation: Download (PDF)

Agenda and details of the consultation: URL

Introduction

This collaborative project is being led by the the Centre for Internet and Society, India (CIS) together with Domestic Workers Rights Union (DWRU) in Bangalore. The research team comprises of Geeta Menon, Parijatha G.P., Sumathi, Radha K., and Zennathunnisa from DWRU, and Aayush Rathi and Ambika Tandon from CIS. Through a collective research process, this research team has explored the proliferation of digital platforms as a key intermediary in the domestic work sector, and in supporting or challenging deeply rooted structural inequities. For more information on the research project, see the project announcement published on the CIS website [1]. This work forms part of the Association for Progressive Communications’ Feminist Internet Research Network project, supported by the International Development Research Centre, Ottawa, Canada.

The multistakeholder consultation was structured in two segments: a) a presentation outlining initial observations and analysis, and b) a semi-moderated open discussion. Together, these sessions aimed to initiate conversations pertaining to the role of digital platforms, the legal classification of domestic and gig workers, and devising regulatory solutions to improve conditions of work. Preliminary findings were based on qualitative in-depth interviews with workers, platform companies, unions, skilling agencies, and labour officials in both Bengaluru and New Delhi. Feminist approaches were employed in conducting these interviews, and participatory, consensual, reflexive and collaborative research was prioritised.

Situating the lived realities of domestic workers, the event sought to centre the voice of domestic workers in the consultation around the future of their work. The event had attendance from multilingual attendees. The original presentation was made in English, and Geeta Menon translated the presentation and the discussion that followed in Kannada [2].

Footnotes

[1] Tandon, A., & Rathi, A. (2019, October 1). Digital mediation of domestic and care work in India: Project Announcement. Retrieved from https://cis-india.org/raw/digital-domestic-work-india-announcement

[2] Rathi, A. (2019, November 16). Domestic Work in the 'Gig Economy'. Retrieved from https://cis-india.org/raw/domestic-work-in-the-gig-economy-20191116; Tandon, A., & Rathi, A. (2019). Domestic workers in the ‘gig’ economy [PowerPoint slides]. Retrieved from https://cis-india.org/raw/domestic-work-and-platforms-presentation

For more details visit https://cis-india.org/raw/platformisation-of-domestic-work-in-india-report-from-a-multistakeholder-consultation

Platforming precarity: Data narratives of workers sustaining urban platform services

2024-10-15T02:42:26Z

CIS conducted quantitative surveys with over 800 workers employed in the app-based taxi and delivery sectors across 4 cities in India as part of the ‘Labour Futures’ project supported by the Internet Society Foundation. The surveys covered key employment indicators, including earnings and working hours, work-related cost burdens, income and social security, and platform policies and management. Findings from these surveys are presented as data visualisation briefs centring workers’ everyday experiences. These data briefs form a foundational evidence base for policy and action around labour rights, social protection, and urban inclusion in platform work.

It has been over a decade since app-based delivery and taxi sectors began operations in India, and have since expanded to several metropolitan and smaller cities. These sectors together account for the largest proportion of the platform workforce in India. Workers’ organising and collective action have long revealed extractive labour practices in the platform economy. Their demands call for the recognition of their labour rights by policymakers and platforms, an end to exploitative working conditions, and the introduction of effective policy that protects their rights and wellbeing.

In 2021-22, the labour research vertical at the Centre for Internet and Society conducted quantitative surveys with over 800 workers in the app-based taxi services and app-based delivery services sectors. Spanning four cities (Delhi-NCR, Mumbai, Guwahati, Lucknow), the surveys gathered comprehensive data on the conditions of work in the platform economy in these cities, within its two dominant sectors.

The survey covered key labour indicators—(i) the conditions of work for workers, including recruitment, wages, incentive structures, and work-related cost burdens (ii) workforce management, including hours spent working for the platform, surveillance and control measures, and (iii) workers’ coverage under income security, social security and social protections, including provident funds, health and accident insurance, and pensions.

Key Findings

The generation of city-level data aimed to support policymaking and advocacy towards achieving just outcomes for workers in the rapidly platformising Indian economy. These survey findings speak to i) top-down approaches of regulatory, legislative, and judicial action through evidence-building, and ii) bottom-up approaches of mobilisation and advocacy campaigns of workers’ collectives.

The city-wise data briefs highlight region-specific differences and similarities shaped by histories and newer developments of labour platforms operating in the urban economy. Across the four survey cities, the data briefs reveal the ways in which precarity materialised in platform work. Workers grappled with numerous socioeconomic vulnerabilities that influenced their entry and continued employment in platform work. They faced low-wage outcomes, worsened by a reduction in bonuses, and high operational work-related expenses. Earnings remained low and uncertain despite workers putting in immensely long hours working for platforms. Worsening these burdens was widespread income insecurity that workers faced in both app-based taxi and delivery sectors.

Mapping delivery and taxi platform services across cities

The taxi services sector in all cities was dominated by two large platforms—Uber and Ola Cabs. These platforms had established a highly concentrated labour market for taxi workers. The exception to this was the taxi platform labour market in Guwahati, where the local platform, PeIndia, employed 35% of taxi workers in the city.

The delivery services sector in all cities had a high concentration of pan-India platforms. Food delivery services were concentrated by Swiggy and Zomato across cities. E-commerce delivery services had a diversity of platforms including Amazon, Flipkart, E-kart Logistics, and Shadowfax, as well as grocery delivery services like Big Basket, Dunzo, and Jio Mart.

Economic necessity and a lack of alternative employment pushing workers into precarious platform work

The pathway to precarious platform work was distress-driven, borne out of low wages in previous salaried work, or a lack of alternative employment. A large proportion of workers were previously engaged in salaried employment, who then shifted to platform work, marking increased informality and precarity in their employment status. In Mumbai, over 64% of workers were in salaried employment previously, and this also the case for over 50% of workers in Guwahati, and over 42% of workers in Delhi-NCR. In Lucknow and Delhi-NCR, pandemic-driven unemployment was a key driver for a staggering proportion of workers who joined platform work as a distress employment source. Over 30% of workers in Lucknow and Delhi-NCR were previously unemployed.

These socioeconomic vulnerabilities influenced workers entry and continued employment in platform work. Key factors for workers entering were the lack of alternative employment sources and the hope for better pay and potential job flexibility. The lack of alternative jobs was a major push into platform work for workers in Delhi-NCR and Lucknow—over 60% of workers in Delhi-NCR and over 50% of workers in Lucknow. At least 40% of workers across cities mentioned the expectation of better pay as a major reason to start platform work, while potential job flexibility was also a key reason for workers in Mumbai and Guwahati. However, as the findings below show, workers’ expectations were unmet.

Externalised joining, statutory, and operational costs

High joining, statutory, and operational costs were offloaded onto workers to access and continue platform work. This was especially the case for taxi workers who owned their vehicles, and had to incur vehicle investment costs and downpayment, as well as statutory costs that included operating permits, road tax, vehicle insurance, and fitness fee. Across all cities, average monthly expenses for taxi workers were above INR 30,000. For delivery workers, average monthly expenses mostly comprised fuel costs, and were around INR 5,500 in Guwahati and Lucknow, and around INR 6,700 in Delhi-NCR and Mumbai. These high externalised costs reveal the economic vulnerabilities inherent within platform work.

Compounding these costs, platforms in the taxi services sectors also charged commissions unevenly and in varying fee structures—ranging from 20% to 30% of the fare in Mumbai and Lucknow, and going as high as 35% in Delhi-NCR and Guwahati. It is important to note that high commissions persist despite the mandate under the Motor Vehicle Aggregator Guidelines, 2020 to cap commissions and other platform charges at 20% of the fare.

Platforms’ offloading of costs to workers have resulted in workers’ having to rely on informal leasing, debt, and subcontracting arrangements. These arrangements were seen across all cities, where workers in the city were either renting the vehicle they were driving, paying a commission to a vehicle owner, paying off vehicle EMIs on someone else’s behalf, or were paid a fixed salary by a vehicle owner. Notably, in Lucknow, around 35% of taxi workers were engaged under these informal arrangements.

Insufficient incomes and economic vulnerabilities

Workers' experiences, across cities, highlight how a majority contended with low-wage outcomes. Earnings remained low and uncertain for workers despite the fact that they were putting in long work hours. Several factors contributed to this insufficiency and uncertainty in workers’ earnings: stringent platform requirements around high acceptance rates and ratings, which were important determinants, decreased flexibility, and high offloaded work-related expenses.

Across cities, earnings for delivery workers were considerably lower than those for taxi workers. When earnings were adjusted for standard weekly work hours (48 hours/week), over 50% of delivery workers in Mumbai, Guwahati, and Lucknow were earning less than the corresponding state-wise minimum wages. Further, over 75% of delivery workers in these cities were earning below estimated state-wise living wages. Platform work was also insufficient in meeting essential living needs for taxi workers in Mumbai, Guwahati, and Lucknow. Around 30% of taxi workers (23% in Guwahati) were earning less than minimum wages, and around 50% (80% in Mumbai) were earning less than estimated living wages. Earnings for both delivery and taxi workers in Delhi-NCR were substantially lower than minimum wage and living wage standards. 69% of workers in the taxi services sector and 87% of workers in the delivery services sector earned less than the minimum wage in Delhi. Moreover, 92% of workers in the taxi sector and 97% of workers in the delivery sector earned lower than the estimated living wage.

These insufficient incomes were particularly damaging to workers’ lives and livelihoods, considering their high dependence on income from platform work. An overwhelming proportion of workers (over 94% across all cities) were engaged in platform work as their main source of income, as opposed to part-time employment. They also faced significant economic burdens such as being sole earners in their household, having multiple financial dependents, having financial commitments to provide remittances back home, and so on. Worsening these burdens was widespread income insecurity that workers faced across all cities—for over 43% of workers (up to 65% in Guwahati), earnings from platform work were insufficient for covering basic household expenses.

Workplace risks and ineffective redressal mechanisms

Workers in both sectors were working immensely long hours in order to try and make adequate earnings while working for platforms, working several hours above standard weekly work hours (48 hours/week) typically prescribed by occupational health standards. Across all cities, delivery workers spent a median of over 60 weekly hours working for platforms, and taxi workers spent a median of around 84 weekly hours.

Alongside the adverse health impacts of long work hours, workers faced grievous workplace risks, including risks of physical assault, theft, poor road safety, and harsh weather conditions. Around 75% of delivery and taxi workers faced these issues in Mumbai and Lucknow. An even greater proportion of workers were exposed to these risks in Delhi-NCR (84%) and Guwahati (90%).

Despite several workplace risks, platforms remained unaccountable for their failure to guarantee safe working conditions. Across all cities, less than 10% of workers found that their platform took steps to improve working conditions. Workers’ overall experience with platform grievance redressal mechanisms was mixed. For instance, in Lucknow, only around 25% of workers who raised grievances did not receive a resolution. In contrast, 50% of taxi workers in Delhi-NCR did not receive a resolution, as was the case for 76% of taxi workers in Mumbai. Workers have limited recourse when their grievances go unanswered. Platforms, however, wield significant control over terms of work, making it difficult for workers to challenge unfair decisions.

Low coverage and accessibility of social protection mechanisms

Social security covered by platforms typically included health insurance and accident insurance. Workers faced significant gaps in insurance coverage, and these gaps were particularly glaring in the taxi services sector. Across cities, health and accident insurance coverage for taxi workers was below 10% (an exception was 11% of workers covered by accident insurance in Delhi-NCR). It is important to note that this low coverage exists despite the Motor Vehicle Aggregator Guidelines, 2020 mandating provision of health insurance and term insurance from platforms.

Delivery workers had a relatively higher percentage of insurance coverage from platforms, although coverage varied across cities. Health insurance coverage was low for delivery workers in Delhi-NCR (21%) and Guwahati (14%), but higher for workers in Lucknow (34%) and Mumbai (44%). In the case of accident insurance, insurance was covered by platforms for over 40% of delivery workers in Delhi-NCR and Lucknow, while a greater proportion of workers were covered in Mumbai (63%) and Guwahati (72%). Even though delivery workers were covered by platform-provisioned insurance, claiming benefits was an unreliable and time-consuming process. Workers who attempted to access benefits faced several obstacles, including poor awareness of available schemes, inadequate coverage, and little to no platform support in navigating complex claims procedures.

The inadequacy of platform-provisioned insurance was exacerbated by the exclusion of workers from government social protection mechanisms. In Delhi-NCR, Guwahati, and Lucknow, over 35% of workers in both sectors were left outside of social protection from governments. In Mumbai, over 66% of workers were excluded.

Contributors

Conceptualisation + planning: Aayush Rathi, Abhishek Sekharan, Ambika Tandon, Chetna V M, Chiara Furtado, and Nishkala Sekhar

Writing: Aayush Rathi, Ambika Tandon, Chetna V M, Chiara Furtado, and Nishkala Sekhar

Data analysis: Abhishek Sekharan, Chetna V M, and Nishkala Sekhar

Data visualisation: Sriharsha Devulapalli

Design + design direction: Annushka Jaliwala and Yatharth

Review: Aayush Rathi and Abhineet Nayyar

Survey design + planning: Abhishek Sekharan and Ambika Tandon

Survey implementation: Abhishek Kumar

Research advice: Nora Gobel and Uma Rani Amara

We are deeply grateful to the workers who participated in the surveys for generously sharing their time, experiences, and insights with us.

This work was supported by the Internet Society Foundation, as part of the “Labour Futures” project at the Centre for Internet and Society.

This work is shared under the Creative Commons Attribution-ShareAlike 4.0 International License (CC BY-SA 4.0)

To know more about this work, please write to us at chiara@cis-india.org

Explore more of CIS’ research on labour and digitalisation at platformwork.in

For more details visit https://cis-india.org/raw/platforming-precarity-data-narratives-workers

Pinning the Badge

nishant — 2015-05-08T12:34:23Z

In a world of competition, badging provides a holistic way of grading and learning, where individual talents are realised and the knowledge of the group is used.

The article by Nishant Shah was published in the Indian Express on March 18, 2012.

I write this column fresh out of being a judge at the Digital Media and Learning contest on “Badging for Life-long Learning” in San Francisco. While the contest focused largely on the American education system and its future, the idea of badging that each person brings a set of skills to a study or workplace is useful to think about, in connection with India. We have now spent some time, in India, hearing about how education in the country has been ruined. There is a constant narrative of the university in shambles, where we seem to lack competent teachers, engaged students, and the resources to build efficient infrastructure for learning. This argument also positions employment as the only aim of education, reducing our humanist and social sciences legacies to skill-based information transmission.

Digital technologies emerge as a cure for the problems that contemporary education seems to be facing. The availability of resources at affordable costs for anybody online, has been one of the biggest promises of the internet, and it hopes to build a better learning environment and better learners. The condition of being connected to a much larger network of educators and learners, also offers us the possibilities of producing better and innovative knowledge structures. There is also an inherent ambition that the introduction of new digital competencies and skills will encourage both students and teachers to integrate their learning and pedagogy with their lived reality, producing responsible people and citizens. However, in all these expectations around the role of the digital technology in transforming learning, the idea of grading and evaluation remains unquestioned.

Even in the most radical restructuring of education systems, grades remain an absolute form of quantifying and measuring skills that the student is supposed to demonstrate. Grading might take up different forms — numbers, letters, percentile, etc — or it might take up different methods — continuous grading, take-home exams — but it eventually becomes the only badge that the student takes into the “real world”.

The idea of a badge as an alternative to this particular kind of quantification oriented learning that sees the grade as a final evaluation and in some ways, a termination of the learning process, opens up huge possibilities for how we understand learning. The badge is not imagined as yet another kind of grading, but instead it is recognition of certain skills and competences that we bring to and build in classrooms with our peers. A badge allows the students to recognise their own investment in the learning process, enabling them to realise their particular skills on the way to learning. In any learning environment, students play many roles. Some are good as connectors, some serve as conduits of information, some are good in specific areas and need help with others, some are mentors, some are translators of knowledge, some help in creating new forms of knowledge. Unfortunately, most of our grading patterns refuse to acknowledge and credit these skills which are crucial for surviving the academic world. The ability of the students to badge themselves, and others in their peer groups, acknowledging their contributions to their collective learning, might be the motivation and encouragement that we are looking for.

A peer-2-peer system of badging, which enables learners to be critically aware not only of their own interaction with knowledge, but also recognises the ways in which larger communities of knowledge — including the peers and teachers — opens up an extraordinary way of thinking about education. It disrupts the competitive modes of cut-throat modes of education systems we are building and allows us to re-think the function of education and the role of learners in educational environments. The digital systems of social networking and reputation management, already perform some of these tasks, which is why, a student who might not do well in class might be a YouTube sensation, finding thousands of followers worldwide. Or a student who might not show research aptitude in class might be editing complex Wikipedia entries on subjects that high-level researchers are engaging with. All these digital systems acknowledge the roles that people play in learning and knowledge production, and in that reward of recognition, provide incentives for learners to re-examine their role within knowledge systems.

Such a system of badging, that exceeds the static classroom, allows for students to become stakeholders in their own education, building connected communities of learning. It hints at what the future of education is going to look like. More importantly, it offers a new way of thinking about technology and its role in redesigning education, which is not merely about introducing technologies into classrooms and continuing with the traditional modes of learning through new technology skills. Instead, we have a model for what learning means, how we interact with conditions of knowledge consumption and production, and how, we can form global communities of learning which might find an anchor in the classrooms but also transcend the brick-and-mortar institutions of learning as we understand them.

For more details visit https://cis-india.org/digital-natives/pathways/pinning-the-badge

PDC 2022

Admin — 2023-07-04T07:05:09Z

Divyansha Sehgal and Yatharth presented their work - Designing Domestic Work Platforms - on critical design assessments of gig work platforms at the Participatory Design Conference.

For more detail on the conference held from 19 August to 1 September 2022, click here

For more details visit https://cis-india.org/raw/pdc-2022

Pathways to Higher Education

nishant — 2015-03-30T14:52:54Z

The Pathways Project to Higher Education is a collaboration between the Higher Education Innovation and Research Applications (HEIRA) at the Centre for the Study of Culture and Society (CSCS) and the Centre for Internet and Society (CIS). The project is supported by the Ford Foundation and works with disadvantaged students in nine undergraduate colleges in Maharashtra, Karnataka and Kerala, to explore relationships between Technologies, Higher Education and the new forms of social justice in India.

These colleges are the SIES College of Arts, Science and Commerce, Mumbai, St. Xavier’s College, Mumbai, Ahmednagar College, Ahmednagar, UC College, Aluva, Newman College, Thodupuzha, Farook College, Kozhikode, Vidhyavardhaka College, Mysore, Dr. AV Baliga College, Kumta and St. Aloysius College, Mangalore from the states of Maharashtra, Kerala and Karnataka.

For more details visit https://cis-india.org/digital-natives/pathways/learning-in-higher-education

Parichiti - Domestic Workers’ Access to Secure Livelihoods in West Bengal

Anchita Ghatak — 2020-12-30T10:01:36Z

This report by Anchita Ghatak of Parichiti presents findings of a pilot study conducted by the author and colleagues to document the situation of women domestic workers (WDWs) in the lockdown and the initial stages of the lifting of restrictions. This study would not have been possible without the WDWs who agreed to be interviewed for this study and gave their time generously. We are grateful to Dr Abhijit Das of the Centre for Health and Social Justice for his advice and help. The report is edited by Aayush Rathi and Ambika Tandon, and this work forms a part of the CIS’s project on gender, welfare and surveillance supported by Privacy International, United Kingdom.

Domestic Workers’ Access to Secure Livelihoods in West Bengal: Read (PDF)

Cross-posted from Parichiti.

Executive Summary

Hundreds of thousands of women from poor communities work as domestic workers in Kolkata. Domestic work is typically a precarious occupation, with very little recognition in legislation or policy. Along with other workers in the informal economy, women domestic workers (WDWs) were severely impacted by the national lockdown enforced in March, with loss of livelihood and few options for survival.

Parichiti works with WDWs in 20 different locations - slums and informal settlements in Kolkata and villages in south 24 Parganas. We conducted this pilot study from late June to August 2020 to document the situation of WDWs from March onwards, in the lockdown and the initial stages of lifting of restrictions. We interviewed 14 WDWs on the phone to record their experiences during the lockdown and after, including impact on livelihoods. The objectives of the study were to document the impact of the Covid-19 pandemic on the lives of WDWs, with focus on economic and health dimensions.

We found that most domestic workers in our sample were paid for March, but faced difficulties in procuring wages April onwards. During this period, they faced economic hardships that threatened their survival, with members of their family also involved in the informal sector and experiencing loss of wages. Workers survived on relief received through civil society or by taking loans from banks or informal lenders. Some are now stuck in a debt trap.

Most went back to work from June, but faced several barriers – public transport services continued to be dysfunctional, apartment complexes prohibited entry of outsiders, and employers were reluctant to allow workers into their homes. Employers were wary of workers if they were employed in multiple households or used public transport, forcing workers to adapt to these conditions. Due to these reasons, some workers lost their jobs permanently, while others returned with lower wages or lower number of employers. Workers were well aware of the precautions to be taken at the home and workplace with regards to Covid-19.

Many WDWs were unable to access ration through the Public Distribution System. Some were not enrolled and others were enrolled in the districts they had migrated from. Some were not classified as below the poverty line and were hence not priority households for the state, although they were ‘deserving’ beneficiaries. All of the respondents were affected by Cyclone Amphan, which devastated parts of the state in May 2020. Despite the announcement of a sizeable compensation by the state, those whose homes were impacted were unable to get any relief. WDWs overall tended to not rely on the state for welfare or health services. Many regarded public health systems to have poor quality services, and turned to private services when possible. Both central and state governments fell short of meeting the needs of WDWs during the pandemic, which could potentially have long-term impact on their income and health.

For more details visit https://cis-india.org/raw/parichiti-domestic-workers-access-to-secure-livelihoods-west-bengal