GOI Notification of 12th November on Digital Media - The Beginning of the Regulatory Journey for the Digital Space?

On November 09, 2020, the President of India issued a notification under Article 77(3) of the Constitution amending the Govt of India (Allocation of Business) Rules, 1961, according to which the Information & Broadcasting  Ministry (“I&B Ministry”) will now have the power to regulate and formulate policies, issue orders, instructions, notifications etc., pertaining to online news portals and content on Over the Top (“OTT”) platforms such as Netflix, Amazon Prime Video, Hotstar and many more (“Notification”).

Following this development news and other media have been abuzz with headlines like “Govt to regulate OTT, online news platforms[1]” and “Netflix, Amazon Prime Video, online news portals now under govt regulation[2]”. Given how quickly this entire development took place, these headlines convey a sense of uncertainty that looms over the future of OTT platforms, content creators, producers and many others who have in the recent times tapped into the potential of this space.. To think about it, during our time at home this lockdown, our consumption of online content has gone up manifold, with an array of latest releases available to us from the comfort of our homes.

What then does this development mean for stakeholders and players in this space? Where did the I&B Ministry get this power from and what are its implications?

Ministry vs Ministry

Until the Notification was issued, it was generally believed that OTT platforms and online streaming services fell under the jurisdiction of India’s Ministry of Electronics & Information Technology (“MEITY”), though there were no explicit entries for the same in the Allocation of Business Rules for MEITY but the logic was that those platforms came under the purview of the Information Technology Act, 2000. Two years ago, the I&B Ministry formed a committee to devise ways to regulate online media and other internet content in India, but the panel was disbanded due to the reshuffling of the Prime Minister’s Cabinet. The mandate was then handed over to a panel overseen by the MEITY. When the topic of regulation of such content  resurfaced, the MEITY asserted that the Information Technology (IT) Act 2000 and its intermediary guidelines governed the conduct of all third-party content, including content pushed by OTTs, while the I&B Ministry constantly insisted on a stronger code of conduct[3]. The Notification has most certainly resolved the tussle between the I&B ministry and MEITY as to under whose domain the regulation of online content falls. We now know it is the I&B Ministry.

Constitutionality

Article 77(3) of the Constitution of India empowers the President to make rules for allocation of business of the government to various ministries and departments, in furtherance to which the President had framed GOI (Allocation of Business) Rules, 1961. Under Article 73 of the Constitution, the executive power of the Union extends to all the matters in respect of which Parliament has powers to make laws. Entry 31 of the List 1 of the 7th Schedule of the Constitution already empowers Parliament to legislate on broadcasting while entry 60 provides for sanctioning of cinematograph films for exhibition. However, there are no specific entries for films and audio-visual programmes made available by online content providers and news/current event content on online platforms, which would then be covered by the residual entry 97 of List 1. It is important to note that in order to prevent any constitutional challenge from the OTT platforms and other online content providers, the Government has vide the Notification added entries “22A. Films and Audi-Visual programmes made available by online content providers and 22B. News and current affairs content on online platforms” in the allocation of business of the I&B Ministry. It is interesting to note that these two new entries have been inserted under the broader heading of  Section V titled “Films” of the business allocated to I&B Ministry under the Second Schedule of the GOI (Allocation of Business) Rules, 1961. In the absence of any Parliamentary legislation regulating this ‘unoccupied field,’ the I&B Ministry has been empowered to issue press notes, circulars, clarifications and other forms of executive instructions to regulate the digital media and OTT platforms.

Current Scheme Regarding Regulation of Online Content

The need to have some sort of regulation to govern the OTT/online content emerged in early 2017/2018, soon after the release of what can be touted as India’s first and very own web-series ‘Sacred Games’ on the platform Netflix. Following the release of this series, a lot of legal notices ensued due to the use of unrefined language as well as depiction of violence and other hard-hitting content portrayed on the series[4] at a time when the television space was heavily regulated and censored. Obviously, given the vastness of this space and the concerns over the effect that regulation would have on the freedom of speech and expression, the Internet and Mobile Association of India (“IMAI”) proposed auniversal self-regulation code to govern content on online OTT platforms (“Code”). The Code was a welcome move and called for setting up of an industry self-regulatory body called the Digital Content Complaints Council (DCCC) [5]. In September 2020, the Code was adopted and signed by 15 OTT platforms, including Netflix, Disney Plus Hotstar, Amazon Prime Video, Zee5, Voot, Jio Cinema, ALTBalaji, Eros Now, Hungama and Shemaroo[6]. The Code includes a framework for age classification, content descriptions for titles as well as access control tools. The code also introduces a structured grievance redressal and escalation mechanism to report non-compliance where OTT content providers are required to set up a consumer complaint department or an internal committee as well as an advisory panel that will deal with complaints, appeals and escalations. However, this Code did not receive support from the I&B Ministry as it was merely a self-regulating code with no clarity on ‘prohibited content’. Now, with the Notification issued by the I&B Ministry, it will be interesting to see whether the existing Code is revised or whether the I&B Ministry will formulate its own set of rules and regulations to regulate such content.

Foreign Direct Investment

In furtherance to the Notification, the I&B Ministry has issued a Public Notice dated 16th November 2020 calling upon entities involved in the “uploading/streaming  of News and current affairs through digital media” to comply with the central government’s earlier order dated September 18th 2019, permitting 26% Foreign Direct Investment under the government approval route to such entities and laid out detailed actions to be undertaken by such entities to comply with the September 2020 clarification.
Under the notice, “entities having foreign investment below 26% may furnish an intimation to the Ministry of Information and Broadcasting within one month giving details of the company and its shareholding pattern along with the names and addresses of its directors / shareholders. It has directed such entities to also provide the names and addresses of its promoters/significant beneficial owner s and also a confirmation with regard to compliance with pricing, documentation and reporting requirements under the FDI policy, Foreign Exchange Management (Non-debt Instruments) Rules, 2019 and Foreign Exchange Management (Mode of Payment and Reporting of Non-debt Instruments) Regulations, 2019.

Whilst this public notice is a compliance requirement, it is indicative that the I&B Ministry is now looking at the OTT and digital space seriously as a potential source of generating revenue but again, how much would their involvement be in a conventionally lesser ‘censored’ space? Only time will tell.

Concluding Thoughts

Bringing OTT platforms, online news and other internet platforms and content therein under the purview of the I&B Ministry may have far reaching consequences. This latest development also needs to be read in conjunction with the Press Note 4 of 2019 dated 18th September, 2019 mandating FDI cap of 26% on the Digital Media and the Clarification dated 16th October, 2020 issued by the Govt clarifying the FDI Policy for uploading/streaming of news and current affairs through the Digital Media. Both these developments have created several interpretative challenges for the various stake holders in this space.  While the amendments to the Allocation of Business Rules have already established that it gives the I&B Ministry the power to issue press notes, circulars and other forms of executive instructions to regulate the digital media and OTT platforms, there are concerns that such regulatory intervention may dilute the quality of content that we consume going ahead and this may also potentially impinge on the fundamental right of free speech and artistic expression.


[1]  https://www.hindustantimes.com/india-news/govt-to-regulate-ott-online-news-platforms/story

[2]  https://www.hindustantimes.com/india-news/government-brings-online-films-news-content

[3]  https://www.businessinsider.in/tech/news/ott-platforms-hotstar

[4] https://time.com/5339495/sacred-games-netflix-india-court/

[5] https://www.techcircle.in/2020/09/07/netflix-amazon-prime-video-among-15-ott-players-to-adopt-self-regulation-code

[6] https://www.hindustantimes.com/bollywood/ott-platforms-sign-self-regulation-code-in-india

 

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Photo of Bharat Vasani Bharat Vasani

Partner in the  General Corporate and TMT Practice at the Mumbai office of Cyril Amarchand Managaldas. Bharat has over 30 years of experience at senior management level. His areas of specialization includes company law, corporate and commercial laws, securities law, capital market, mergers…

Partner in the  General Corporate and TMT Practice at the Mumbai office of Cyril Amarchand Managaldas. Bharat has over 30 years of experience at senior management level. His areas of specialization includes company law, corporate and commercial laws, securities law, capital market, mergers and acquisitions, joint ventures, media & entertainment law, competition law, employment law and property matters. He heads firm’s media and entertainment law practice.  He is highly regarded in Government circles and in various industry organizations for his proactive approach on public policy issues. Bharat was a member of the Expert Committee appointed by the Government of India to revise the Companies Act, 2013.

Prior to joining the Firm, Bharat was the Group General Counsel of the Tata Group.  He has been at the helm of and steered several large key M&A transactions pursued by the Tata Group in the last 17 years.

Bharat’s contribution to the legal fraternity has been recognized by the Harvard Law School’s Award for Professional Excellence in 2016. Bharat has won several other national and international awards for his various achievements. He had a brilliant academic record in law and first rank holder in all India company secretary examination. He can be reached at bharat.vasani@cyrilshroff.com

Photo of Chandana Arval Chandana Arval

Associate in the media and entertainment practice at the Mumbai office of Cyril Amarchand Mangaldas. Chandana has over 2 years of professional working experience Media and Entertainment Law industry. She has negotiated, reviewed and drafted a variety of contracts in this space and…

Associate in the media and entertainment practice at the Mumbai office of Cyril Amarchand Mangaldas. Chandana has over 2 years of professional working experience Media and Entertainment Law industry. She has negotiated, reviewed and drafted a variety of contracts in this space and also conducted due diligences and script reviews for many prominent media clients-production houses, actors, writers, talent management agencies etc. She has also independently handled transactional work in this sector during her secondment at a prominent film production house. She can be reached at chandana.arval@cyrilshroff.com.