Jyotsna JayaramPartner
Akshaya Parthasarathy Senior Associate
Amala GAssociate
Key Developments
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Liberalisation of foreign investment in the space sector
On 4 March 2024, the government issued Press Note 1 of 2024 amending India’s Consolidated Foreign Direct Investment Policy (FDI Policy) to significantly liberalise foreign investments in the space sector as follows:
- Up to 74% under the automatic route with respect to satellites’ manufacturing and operation, satellite data products, and ground segment and user segment;
- Up to 49% under the automatic route with respect to launch vehicles and associated systems or sub-systems, creation of spaceport for launching and receiving spacecraft; and
- Up to 100% under the automatic route with respect to manufacturing of components and systems/sub-systems for satellites, ground segment, and user segment.
These changes came into effect on 16 April 2024 when amendments to Schedule I of the Foreign Exchange Management (Non-Debt Instrument) Rules, 2019 were notified. The new regime is expected to attract and ease foreign investment in the space sector from private players, which was largely restricted under the previous regime.
(To read our detailed update on this development, click here.)
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Requirement to periodically destroy records of interception directions extended to all competent authorities
The Information Technology (Procedure and Safeguards for Interception, Monitoring and Decryption of Information) Rules, 2009 (IT Interception Rules) issued under the Information Technology Act, 2000 (IT Act) permit only competent authorities identified by the government, such as the Enforcement Directorate, Central Bureau of Investigation and Narcotics Control Bureau, to issue directions for the interception, monitoring, and decryption of information generated, transmitted, received or stored in computer resources.
In February 2024, the Ministry of Electronics and Information Technology (MeitY) notified an amendment to the IT Interception Rules requiring all competent authorities to destroy records of such directions and any resultant information every six months, unless required or likely to be required for functional requirements. Previously, this obligation only extended to security agencies, which did not include law enforcement and other regulatory bodies within its scope.
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Advisory to intermediaries on the deployment of artificial intelligence technologies
Further to the advisories issued for preventing the misuse of deepfakes (to read our previous update on these, click here), MeitY issued another advisory to various intermediaries regarding the use and deployment of artificial intelligence (AI) technologies including AI models, large language models and generative AI software on 1 March 2024. This advisory imposed some onerous obligations, including requiring that intermediaries obtain prior permission from the government to deploy ‘under-testing or unreliable’ AI technology, appropriately label and intimate users of the fallibility or unreliability of the output generated from such AI technology, potentially identify the creator or first originator of misinformation or deepfakes, and submit an ‘action taken-cum-status report’ to the MeitY within 15 days.
Subsequently, on 15 March 2024, the MeitY reportedly issued a fresh advisory to select intermediaries, notably doing away with several impractical compliances such as the requirement to obtain prior permission, identify first originators of synthetic material, and submit an ‘action-taken-cum-status report’. Instead, the new advisory appears to focus on preventing the misuse of AI technologies by requiring intermediaries to undertake the following measures, among others:
- ensure that such technologies are not used to share unlawful content, allow bias or threaten electoral integrity,
- inform users about the consequences of dealing with unlawful content,
- label ‘under-tested or unreliable’ technologies before making them available to users in India, and
- embed metadata to flag the source of changes to the content.
While this advisory seems to have been shared with select intermediaries, organisations offering AI products may nevertheless benefit from considering the latest guidelines before launching them in India.
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Indian Cyber Crime Coordination Centre tasked with notifying intermediaries of unlawful activities committed using computer resources under their control
The Ministry of Home Affairs has designated the Indian Cyber Crime Coordination Centre (I4C) as its agency to, among other things, notify instances of data or communication links residing in or connected to a computer resource controlled by an intermediary being used to commit an unlawful act. If an intermediary does not expeditiously remove or disable access to such material on that computer resource – upon receiving actual knowledge or such a notification from the I4C – without vitiating the evidence, it would be at risk of losing the safe harbour protection that is accorded to intermediaries under the IT Act immunising them from liability for content hosted on their platforms. Therefore, intermediaries would be well-placed to incorporate processes/modify existing processes to comply with any such communication from the I4C and other government authorities or agencies.
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All machine-to-machine service providers required to register with the Department of Telecommunication
In 2022, the Department of Telecommunication (DoT) issued a set of guidelines for the registration of Machine-to-Machine (M2M) and WPAN/WLAN connectivity providers to address issues such as interface with telcos, security and encryption. In January 2024, the DoT issued an addendum to these guidelines, requiring all entities engaged in the provision of M2M services and WPAN/WLAN connectivity to register with the DoT through the Saral Sanchar portal by 30 June 2024. Non-compliance may lead to disconnection of telecom resources obtained from the telecom service provider. This is another step towards the DoT’s promotion of a standard-based and secure M2M/Internet of Things ecosystem.
Further, the DoT has also issued guidelines to establish and operate a regulatory sandbox for testing wireless products and technologies for research and development or experimentation in specific spectrum bands to enhance the ease of doing business and to promote the domestic manufacture of wireless products. Entities eligible for the regulatory sandbox testing may obtain a ‘WiTe Zone’ license. However, a separate spectrum authorisation should be obtained, for a minimal fee, from the Wireless Planning and Coordination Wing.
In the coming months, several noteworthy developments are anticipated in the Indian technology and telecom regulatory space. The Bombay High Court is expected to determine the validity of certain amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. This decision will determine whether the government can constitute a fact check unit to deter the dissemination of false information regarding the central government’s business. Regulatory approval for online gaming also faces uncertainty as MeitY explores direct control instead of appointing industry-led self-regulatory bodies as contemplated initially.
