Internet Governance Blog

Introduction

The Ministry of Communications and Information Technology on the 10th of February, 2012 released a notification [1] in the Official Gazette outlining the Preferential Market Access [2] Policy for Domestically Manufactured Electronic Goods 2012. The Policy is applicable to procurement of telecom products by Government Ministries/Departments and to such electronics that had been deemed to having security concerns, thus making the policy applicable to private bodies in the latter half. The Notification reasoned that preferential access was to be given to domestically manufactured electronic goods predominantly for security reasons. Each Ministry or Department was to notify the products that had security implications, with reasons, after which the notified agencies would be required to procure the same from domestic manufacturers. This policy was also meant to be applicable to even procurement of electronic goods by Government Ministries/Agencies for Governmental purposes except Defence. Each Ministry would be required to notify its own percentage of such procurement, though it could not be less than 30%, and also had to specify the Value Addition that had to be made to a particular product to qualify it as a domestically manufactured product, with the policy again specifying the minimum standards. The policy was also meant for procurement of electronic hardware as a service from Managed Service Providers (MSPs).

The procurement was to be done as according to the policies of the each procuring agency. The tender was to be apportioned according to the procurement percentage notified and the preference part was to be allotted to the domestic manufacturer at the lowest bid price. If there were no bidders who were domestic manufacturers or if the tender was not severable, then it was to be awarded to the Foreign Manufacturer and the percentage adjusted as against other electronic procurement for that period.

Telecom equipment that qualifies as domestically manufactured telecom products for preferential market access include: encryption and UTM platforms, Core/Edge/Enterprise routers, Managed leased line network equipment, Ethernet Switches, IP based Soft Switches, Media gateways, Wireless/Wireline PABXs, CPE, 2G/3G Modems, Leased-line Modems, Set Top Boxes, SDH/Carrier Ethernet/Packet Optical Transport Eqiupments, DWDN systems, GPON equipments, Digital Cross connects, small size 2G/3G GSM based Base Station Systems, LTE based broadband wireless access systems, Wi-Fi based broadband wireless access systems, microwave radio systems, software defined radio cognitive radio systems, repeaters, IBS, and distributed antenna system, satellite based systems, copper access systems, network management systems, security and surveillance communication systems (video and sensors based), optical fiber cable.

The Policy also mentioned the creation of a self-certification system to declare domestic value addition to the vendor. The checks would be done by the laboratories accredited by the Department of Information Technology. The policy was to be in force for a period of 10 years and any dispute concerning the nature of product was to be referred to the Department of Information Technology.

International and Domestic Response to the Policy

There was a large scale opposition, usually from international sectors, towards the mooting of this policy. Besides business houses, even organizations like those of the United States Trades Representatives criticized the policy as being harmful to the global market and in violation of the World Trade Organization Guidelines.[3] Criticism also poured in from domestic bodies in terms of recommendations towards modification of the policy largely on three grounds: (i) the high domestic value addition requirement and the method of calculation of the same, (ii) the lack of a link between manufacturing and security and (iii) application of the policy to the private sector.

The Cellular Operations Association of India (COAI) in a letter dated March 15, 2012 to the Secretary of the Department Technology and Chairman of the Telecom Commission expressed its views on the telecom manufacturing in the country.[4]The COAI stated that such a development had to be done realistically and holistically so that the whole eco-system was developed as a comprehensive whole. In that regard it also forwarded a study that had been commissioned by COAI and conducted by M/s. Booz and Company titled “Telecom Manufacturing Policy – Developing an Actionable Roadmap”. The report was a comprehensive study of the telecom industry and outlined the challenges and opportunities that lay on its development trajectory. It also talked about Government involvement in the development process. The Report while citing the market share of Indian Telecom Industry which would be around 3% [5] of the Global Market highlighted the fact that no country could be self-sufficient in technology. It further talked about the development of local clusters in order to cut costs and encourage manufacturing, while ensuring that the PMA Policy was consistent with the WTO Guidelines. It further recommended opening up of foreign investments and making capital available to ensure growth of innovation. Finally it highlighted the lack of a connection between manufacturing and security and instead stressed upon proper certification, checks and development of a comprehensive CIIP framework across all sensitive networks for security purposes.

In a further letter to the Joint Secretary of the Department of Information and Technology dated April 25, 2012 the COAI expressed some reservations concerning the draft guidelines that had been published along with the notification.[6] While stressing upon the fact that a higher value addition would be impossible with the lack of basic manufacturing capabilities for the development of technological units, it also highlighted the need to redefine Bill of Materials which had been left ambiguous and subject to exploitation. It further highlighted the fact that allowing every Ministry to make its own specifications would lead to inconsistent definitions and an administrative challenge and hence such matters should be handled by a Central Body. Furthermore it opined that the calculation of BOMs and the Value Additions should be done using the concept of substantial transformation as has been given in the Booz Study. Furthermore, while discouraging the use of disincentives, it stated that one individual Ministry should be in charge of specifying such incentives to avoid confusion and for the sake of ease of business.

In another letter to a Member of the Department of Telecommunications dated July 12, 2012 the COAI stressed upon the futility of having high value additions as the same was impossible under the present scenario.[7] There was a lack of manufacturing sector which had to be comprehensively developed backed by fiscal incentives and comprehensive policies. In spite of that, it stressed that no country could become self-reliant and that such policies, like the PMA, were reminiscent of the “license and permit raj” era. It further said that such policies should be consistent with WTO Guidelines and should not give undue preference to domestic manufacturers to the detriment of other manufacturers. Countering the security aspect, it said that the same had been addressed by the DoT License Amendment of May 31, 2011 whereby all equipments on the network would have to comply with the “Safe to Connect” standard, and stressed upon the lack of any link between manufacturing and security. Furthermore for calculation of Value Addition it suggested an alternative to the method proposed by the Government as the same would lead to disclosures of sensitive commercial information which were contained in the BOMs. The COAI said that the three stages as laid out in the Substantial Transformation (as mentioned in the Booz Study) should be used for calculating the VA. It made several proposals to develop the telecom manufacturing industry in India including provision of fiscal incentives, development of telecom clusters and comprehensive policies which led to harmonization with laws and creation of SEZs among other such benefits.

In October 2012 the Government released a draft notification notifying products due to security consideration in furtherance of the PMA Policy.[8] The document outlined the minimum PMA and VA specification for a range of products. It also stated several security reasons for pursuing such a policy and stated that India had to be completely self-reliant for its active telecom products. It also contained data on the predicted growth of the telecom market in India. The COAI thereafter released a document commenting upon the draft notification of the Government.[9]

Besides highlighting the fact that the COAI still had not received a response to its former comments, it again stressed upon the lack of a link between security and manufacturing. It reiterated its point on the impossibility of a complete self-reliance on any nation’s part, and stressed upon the need of involving other stakeholders in the promulgation of such policies. It also made changes to the notified list of equipments, reclassifying it according to technology and only listing equipments which had volumes. Furthermore it also suggested changes towards the calculation of value addition to include materials sourced from local suppliers, in-house assemblage to be considered local material and the calculation to be done for complete order and not for each item in the order. It further recommended a study be conducted and the industry be involved while predicting demands as such were dated and needed revision. The Government thereafter released a revised notification[10] on October 5, 2012 but it did not contain much of the commented changes that the COAI had proposed.

Thereafter in April 2013, the DeitY released draft guidelines[11] for providing preference to domestically manufactured electronic products in Government Procurement in further of the second part of the PMA Policy. The guidelines besides containing definitions to several terms such as BOM also prescribed a minimum of 20% domestic procurement while leaving the specifications onto individual Ministries. It recommended the establishment of a technical committee by the concerned Ministry or Department that would recommend value addition to products. It followed a BOM based calculation of Value Addition while leaving the matter of certification to be dealt by DeitY certified laboratories that are notified for such purposes by the concerned Ministry/Department. DeitY was the nodal ministry for monitoring the implementation of the policy while particular monitoring was left to each Ministry or Department concerned. Among the annexures were indicative lists of generic and telecom products and a format for Self Certification regarding Domestic Value Addition in an Electronic Product.

The COAI thereafter released a revised draft containing its own comments on April 15, 2013.[12] The COAI pointed out faults in the definition of BOM. It highlighted the difficulty in splitting R&D according to countries, and also stressed upon the impractical usage of BOM in calculation of value addition as the same was confidential business information. As it had already suggested earlier, it reiterated the usage of the Substantial Transformation process for the calculation of Value Addition. While removing the lists of equipments mentioned, it further pointed out that the disqualification in the format for self-certification would be a very harsh disincentive and would result in driving away manufacturers. It suggested that there should be incentives for compliance instead.

The COAI along with the Association of Unified Telecom Service Providers of India sent a letter dated January 24, 2013 to the Secretary, DoT containing their inputs on Draft List of Security Sensitive Telecom Products for Preferential Market Access (PMA).[13] It again stressed upon the fact that security and manufacturing were not related and that the security aspect had been dealt by the “Safe to Connect” requirement mandated by the DoT License Amendment. It talked of the impossibility of arriving at VA figures until the same is defined to internationally accepted norms. Further it opined that if the Government had security concerns it should consider VA at a network level in the configurations as would be deployed in the network or its segments rather at element or subsystem levels as the latter would leave too many calculations open and the procurement entities will find it very difficult to ensure if they meet the PMA requirement or not. It further stressed upon the need to comply with WTO Guidelines while stressing upon the need to pay heed to certification standards than pursue the unavailable link between manufacturing and security through a PMA Policy. Finally it suggested a grouping of telecom products for the policy based on technology rather than individual products.

Pursuant to a Round Table Conference Organized by the Department of Information and Technology, AUSPI and COAI sent another letter dated April 15, 2013 to the Secretary, Department of Information and Technology.[14] It reiterated several points that both the AUSPI and COAI had been suggesting to the Government on the Telecom Manufacturing Policy. It cited the examples of other manufacturing nations to reiterate the fact that no country could be completely self-reliant in manufacturing electronics and such positions would only lead to creation of an environment that would not be conducive to global business. It further stressed upon the need to change the manner of calculation of VA while highlighting the fact that every Department should notify its list of products having security implications and the list of telecom equipment should be deleted from the draft guidelines being issued by DeitY to ensure better implementation.

A major change came in on July 8, 2013 when the Prime Minister’s Office made a press release withdrawing the PMA policy for review and withholding all the notifications that had been issued in that regard.[15] It said that  he revised proposal will incorporate a detailed provision for project / product / sector specific security standards, alternative modes of security certification, and a roadmap for buildup of domestic testing capacity. It further noted that the revised proposal on PMA in the private sector for security related products will not have domestic manufacturing requirements, percentage based or otherwise and that the revised proposal will incorporate a mechanism for a centralised clearing house mechanism for all notifications under the PMA Policy.

The COAI thereafter on November 7, 2013 sent a letter to the DoT containing feedback on the list of items slated for Government procurement.[16] It noted that there were 23 products on which PMA was applicable. It pointed out that there were no local manufacturers for many of the products notified. It also asked the Government to take steps to ensure that fiscal incentives were given to encourage manufacturing sector which was beset by several costs such as landing costs which acted as impediments to its development. It stressed upon the tiered development of the industry needed to ensure that a holistic and comprehensive growth is attained which would result in manufacturing of local products. It requested that the Government "focus on right enablers (incentives, ecosystem, infrastructure, taxation) as the outcome materializes once all of these converge."

The COAI sent a further letter dated November 13, 2013 to the DoT concerning the investment required in the telecom manufacturing industry.[17] It noted the projected required investment of 152bn USD in the telecom sector and that the Government had projected that 92% of the investment would have to come from the Private Sector. COAI, while stressing upon the need of the Government and the Private Industry to work in tandem with each other, suggested that the Government devise methods to attract investments in the telecom sectors from international telecom players and that the Telecom Equipment Manufacturing Council meet to review and revise methods for attracting such investments.

Pursuant to the PMO directive, DeitY released a revised PMA Policy on the 23rd of December, 2014.[18] While there have been a few major changes, not all of recommendations by various bodies have been adhered to.[19] The major changes in the revised policy included the exemption of the private sector from the policy and the removal of PMA Policy to equipments notified for security reasons. The manner of calculation of the domestic value addition has not been changed though there has been a reduction in the percentage of value addition needed to qualify a product as domestic product. Another addition has been of a two-tiered implementation mechanism for the Policy. Tier-I includes a National Planning and Monitoring Council for Electronic Products which would design a 10-year roadmap for the implementation of the policy including notification of the products and subsequent procurement. Under Tier-II, the Ministries and Departments will be issuing notifications specifying products and the technical qualifications of the same, after approval by the Council. The former notifications under the 2012 Policy, including the notification of 23 telecom products by Department of Telecom,[20] are still valid until revised further.[21]

[1]. No. 8(78)/2010-IPHW. Available at http://www.dot.gov.in/sites/default/files/5-10-12.PDF (accessed 03 June, 2014).

[2]. Preferential Market Access

[3]. See The PMA Debate, DataQuest at http://www.dqindia.com/dataquest/feature/191001/the-pma-debate/page/1 (accessed June 2014).

[4]. The letter is available at http://www.coai.com/Uploads/MediaTypes/Documents/letter-to-dit-on-pma-notification.pdf (accessed  June, 2014).

[5]. Around $17bn.

[6]. The letter is available at http://www.coai.com/Uploads/MediaTypes/Documents/letter-to-dit-on-pma-notification.pdf (accessed  June, 2014).

[7]. The letter is available at http://www.coai.com/Uploads/MediaTypes/Documents/coai-to-dot-on-enhancing-domestic-manufacturing-of-telecom-equipment-bas.pdf (accessed  June, 2014).

[8]. The notification no. 18-07/2010-IP can be found at http://www.coai.com/Uploads/MediaTypes/Documents/DoT-draft-notification-on-Policy-for-preference-to-domestically-manufactured-telecom-products-in-procurement-October-2012.pdf  (accessed  June, 2014).

[9]. The commented COAI draft can be found at http://www.coai.com/Uploads/MediaTypes/Documents/Annexure-1-Comments-on-draft-notification-by-DoT.pdf (accessed  June, 2014).

[10]. Available at http://www.coai.com/Uploads/MediaTypes/Documents/dots-notification-on-telecom-equipment-oct-5,-2012.pdf (accessed June, 2014).

[11]. The draft guidelines can be found at http://www.coai.com/Uploads/MediaTypes/Documents/pma_draft-govt-procurement-guidelines-april-2013.pdf (accessed June, 2014).

[12]. The COAI commented draft can be found at http://www.coai.com/Uploads/MediaTypes/Documents/pma-draft-security-guidelines-15-april-2013.pdf (accessed June, 2014).

[13]. The letter can be found at http://www.coai.com/Uploads/MediaTypes/Documents/jac-007-to-dot-on-Januarys-list-of-telecom-products-final.pdf (accessed June, 2014).

[14]. The letter can be found at http://www.coai.com/Uploads/MediaTypes/Documents/jac-to-moc-on-pma.pdf (accessed June, 2014).

[15]. The press release can be found at http://www.coai.com/Uploads/MediaTypes/Documents/pmo-on-pma.pdfhttp://www.coai.com/Uploads/MediaTypes/Documents/pmo-on-pma.pdf (accessed June, 2014).

[16]. The letter can be found at http://www.coai.com/Uploads/MediaTypes/Documents/COAI-letter-to-DoT-on-Feedback-on-List-of-Items-for-Govt-Procurement.pdf (accessed June, 2014).

[17]. The letter can be found at http://www.coai.com/Uploads/MediaTypes/Documents/COAI-letter-to-DoT-on-Investments-Required-(TEMC)-Nov%2013-2013.pdf (accessed June, 2014).

[18]. The Notification No. 33(3)/2013-IPHW can be found at http://deity.gov.in/sites/upload_files/dit/files/Notification_Preference_DMEPs_Govt_%20Proc_23_12_2013.pdf (accessed June, 2014).

[19]. For more information, see http://electronicsb2b.com/policy-corner/revised-preferential-market-access-policy/# (accessed June, 2014).

[20]. The notification has been mentioned and discussed above.

[21]. A list of notifications dealing with electronic products except telecom products can be found on the website of DeitY at http://deity.gov.in/esdm/pma (accessed June, 2014).

The op-ed was published in the Hindu on May 2, 2014.

On May 5, the Supreme Court will hear Kamlesh Vaswani’s infamous anti-pornography petition again. The petition makes some rather outrageous claims. Watching pornography ‘puts the country’s security in danger’ and it is ‘worse than Hitler, worse than AIDS, cancer or any other epidemic,’ it says. This petition has been pending before the Court since February 2013, and seeks a new law that will ensure that pornography is exhaustively curbed.

Disintegrating into binaries

The petition assumes that pornography causes violence against women and children. The trouble with such a claim is that the debate disintegrates into binaries; the two positions being that pornography causes violence or that it does not. The fact remains that the causal link between violence against women and pornography is yet to be proven convincingly and remains the subject of much debate. Additionally, since the term pornography refers to a whole range of explicit content, including homosexual adult pornography, it cannot be argued that all pornography objectifies women or glamorises violent treatment of them.

Allowing even for the petitioner’s legitimate concern about violence against women, it is interesting to note that of all the remedies available, he seeks the one which is authoritarian but may not have any impact at all. Mr. Vaswani could have, instead, encouraged the state to do more toward its international obligations under the Convention on the Elimination of Discrimination against Women (CEDAW). CEDAW’s General Recommendation No. 19 is about violence against women and recommends steps to be taken to reduce violence against women. These include encouraging research on the extent, causes and effects of violence, and adopting preventive measures, such as public information and education programmes, to change attitudes concerning the roles and status of men and women.

Child pornography

Although different countries disagree about the necessity of banning adult pornography, there is general international consensus about the need to remove child pornography from the Internet. Children may be harmed in the making of pornography, and would at the very minimum have their privacy violated to an unacceptable degree. Being minors, they are not in a position to consent to the act. Each act of circulation and viewing adds to the harmful nature of child pornography. Therefore, an argument can certainly be made for the comprehensive removal of this kind of content.

Indian policy makers have been alive to this issue. The Information Technology Act (IT Act) contains a separate provision for material depicting children explicitly or obscenely, stating that those who circulate such content will be penalised. The IT Act also criminalises watching child pornography (whereas watching regular pornography is not a crime in India).

Intermediaries are obligated to take down child pornography once they have been made aware that they are hosting it. Organisations or individuals can proactively identify and report child pornography online. Other countries have tried, with reasonable success, systems using hotlines, verification of reports and co-operation of internet service providers to take down child pornography. However, these systems have also sometimes resulted in the removal of other legitimate content.

Filtering speech on the Internet

Child pornography can be blocked or removed using the IT Act, which permits the government to send lists of URLs of illegal content to internet service providers, requiring them to remove this content. Even private parties can send notices to online intermediaries informing them of illegal content and thereby making them legally accountable for such content if they do not remove it. However, none of this will be able to ensure the disappearance of child pornography from the Internet in India.

Technological solutions like filtering software that screens or blocks access to online content, whether at the state, service provider or user level, can at best make child pornography inaccessible to most people. People who are more skilled than amateurs will be able to circumvent technological barriers since these are barriers only until better technology enables circumvention.

Additionally, attempts at technological filtering usually even affect speech that is not targeted by the filtering mechanism. Therefore, any system for filtering or blocking content from the Internet needs to build in safeguards to ensure that processes designed to remove child pornography do not end up being used to remove political speech or speeches that are constitutionally protected.

In the Vaswani case, the government has correctly explained to the Supreme Court that any greater attempt to monitor pornography is not technologically feasible. It has pointed out that human monitoring of content will delay transmission of data substantially, will slow down the Internet, and will also be ineffective, since the illegal content can easily be moved to other servers in other countries.

Making intermediaries liable for the content they host will undo the safe harbour protection granted to them by the IT Act. Without it, intermediaries like Facebook will actually have to monitor all the content they host, and the resources required for such monitoring will reduce the content that makes its way online. This would seriously impact the extensiveness and diversity of content available on the Internet in India. Additionally, when demands are made for the removal of legitimate content, profit-making internet companies will be disinclined to risk litigation much in the same way as Penguin was reluctant to defend Wendy Doniger’s book.

If the Supreme Court makes the mistake of creating a positive obligation to monitor Internet content for intermediaries, it will effectively kill the Internet in India.

(Chinmayi Arun is research director, Centre for Communication Governance, National Law University, Delhi, and fellow, Centre for Internet and Society, Bangalore)