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Much easier to change laws than mindset: SC

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SC seeks Centre’s reply on fresh pleas against CAA

The Supreme Court on Tuesday directed the Pune-based Film and Television Institute of India (FTII) to allow candidates suffering from colour blindness to pursue all courses on filmmaking and editing. A bench comprising Justices Sanjay Kishan Kaul and M.M. Sundresh said: “It is much easier to change laws, but it takes a long time to change the mindset…” The bench emphasised that the institute should adopt a more inclusive and progressive approach in the matter, and insisted that no discrimination can be made on the basis of colour blindness to get admission in the institute. The bench remarked, “The respondent FTII was expected to encourage liberal thought process…” Justice Kaul said: “There are some vested interests always…change is difficult and a push is required to change.” The bench said that it is not for FTII to determine candidates’ future occupational prospects, and pointed out that the job of an editor is to creatively work with story, dialogue, music and performances. The apex court order came on an appeal filed by Patna resident Ashutosh Kumar against the Bombay High Court order, which declined to entertain his plea seeking admission in three-year postgraduate diploma course in film editing at FTII. 

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Tech

OpenAI Establishes India Presence with Government Relations Head

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OpenAI, backed by Microsoft Corp., has appointed Pragya Misra as its first employee in India, naming her as the head of government relations. The move comes as India votes in a new administration, a crucial time for shaping artificial intelligence regulations in the country. Misra, 39, previously worked at Truecaller AB and Meta Platforms Inc. She is set to start at OpenAI toward the end of the month. Her appointment signals OpenAI’s efforts to advocate for favorable regulations as governments worldwide grapple with how to regulate AI technology.

India, with its vast population and rapidly growing economy, presents significant growth opportunities for global tech companies like OpenAI. However, navigating India’s regulatory landscape can be challenging due to local lawmakers and regulators prioritizing the protection of domestic firms. OpenAI representatives and Misra did not respond to requests for comment outside regular US office hours. Misra’s experience in leading public affairs at Truecaller and Meta Platforms Inc., where she spearheaded WhatsApp’s campaign against misinformation in 2018, positions her well for her new role at OpenAI.

In India, OpenAI faces competition from tech giants like Alphabet Inc.’s Google, which is developing AI models tailored for the country, aiming to cater to diverse linguistic needs and widen internet access. OpenAI CEO Sam Altman emphasized the importance of integrating AI technologies into government services, particularly in sectors like healthcare. Altman, who has previously met with Prime Minister Narendra Modi, underscored India’s role as an early adopter of OpenAI’s generative-AI service, ChatGPT.

While Altman has advocated for more regulations in the AI space, he has also expressed concerns about the potential harm caused by the technology. He believes that while significant regulatory changes may not be necessary for current AI versions, they may become essential in the near future. OpenAI’s decision to appoint its first employee in India reflects the company’s recognition of the country’s importance in the global AI landscape.

With a population of 1.4 billion and a rapidly growing economy, India presents a vast market and innovation hub for AI technologies. By establishing a presence in India, OpenAI aims to leverage local talent and resources to drive its growth and influence in the region. Pragya Misra’s appointment as head of government relations underscores OpenAI’s commitment to engaging with policymakers and stakeholders in India.

Her experience in navigating regulatory environments and building partnerships will be instrumental in advancing OpenAI’s interests and objectives in the country. India’s government has shown increasing interest in AI regulation and adoption, recognizing its potential to transform various sectors, including healthcare, education, and governance.

As AI technologies continue to evolve, policymakers are grappling with issues related to privacy, security, and ethical use, making effective government relations crucial for companies like OpenAI. Moreover, OpenAI’s competition with tech giants like Google highlights the importance of strategic positioning and advocacy efforts in India’s competitive market.

By proactively engaging with regulators and policymakers, OpenAI seeks to shape the regulatory landscape in its favor while also fostering collaboration and innovation within the AI ecosystem. Overall, OpenAI’s decision to establish a presence in India and appoint a government relations head underscores its commitment to driving responsible AI development and adoption globally.

As the company expands its footprint in India, it is poised to play a significant role in shaping the future of AI in the region and beyond.

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Industry & Regulation

FSSAI investigating Nestle over sugar in baby foods: Govt sources

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The Centre has taken cognizance of the charges made against Nestle of adding sugar to infant food products in India.

The government has acknowledged allegations against multinational food company Nestle for adding sugar to infant food products in India. An investigation by Swiss investigative organization Public Eye revealed that despite WHO’s strict guidelines banning added sugars in baby food, Nestle’s Cerelac contains an average of nearly 3 grams of sugar per serving in India.

ANI has learnt from government sources that India’s food regulator “FSSAI is examining the report – will be placed before the scientific panel.”

Nestle responding to queries said, «We believe in the nutritional quality of our products for early childhood and prioritize using high-quality ingredients. Over the past 5 years, Nestle India has reduced added sugars by up to 30%, depending on the variant, in our infant cereals portfolio (milk cereal based complementary food). We regularly review our portfolio and continue to innovate and reformulate our products to further reduce the level of added sugars without compromising on quality, safety and taste.»

The report, however, says Nestle has violated WHO guidelines against adding honey or sugar in baby food products not only in India but also in many Asian, African and Latin American countries.

The report says that out of the 15 Indian Cerelac products tested, laboratory analyses revealed that each serving of cereal contained more than 2.7 gm of added sugar. While Nestle’s labelling highlights the nutrients, added sugar is not as transparently displayed.

The report further finds that Nestle was not following the WHO guidelines in poor countries but was seemingly favoring higher-income countries. “Cerelac wheat-based cereals for six-month-old babies sold by Nestle in Germany and the United Kingdom have no added sugar, while the same product contains over 5 gm per serving in Ethiopia and 6 gm in Thailand,” the study said.

A recent WHO study found that over 11 per cent of Indians are diabetic and 35.5 per cent suffer from hypertension. WHO study warns that obesity has reached “epidemic proportions” in low- and middle-income countries and is accelerating the rise of cardiovascular disease, cancer, and diabetes. Increased consumption of ultra-processed foods high in sugar is said to be one of the main causes of rising obesity.

The investigation has examined 115 Nestle products across markets in Asia, Africa, and Latin America, and revealed that 108 of them contained added sugar.

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Business News

DPI, bankruptcy law, tax code boost India investment destination: WEF official

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The WEF-Cambridge report shows that fintech firms are positive about their regulatory environment, which supports their operations and growth.

A combination of policy changes such as bankruptcy law and taxation code and the enabling environment created by the digital public infrastructure has made India an attractive investment destination for the financial technology sector, a senior World Economic Forum (WEF) official said.

In a video interview with the media, Matthew Blake, Head of the Centre for Financial and Monetary Systems at the WEF said India has been one of the best performing markets in the world and investors have made money here. Blake also struck a word of caution saying that since markets do not move in a purely linear fashion and were prone to ‘’ups and downs’’, there was a need to educate investors. ‘’So this idea of being an informed investor, a diversified investor, and having access to educational resources to do that is really fundamental artificial intelligence (AI),’’ he said. ‘’I think a combination of different policy choices that have been made make India quite an attractive investment destination. In addition to the digital public infrastructure that creates an enabling environment from a technological standpoint, you also have changes in the bankruptcy law and taxation code adding clarity,’’ he said.

Blake said a survey of fintech CEOs by the WEF and the Cambridge Centre for Alternative Finance had revealed that 70 per cent of the firms considered AI as a major force and could be deployed for personalisation and customisation of products and services. Blake said for sectoral regulators, AI could be helpful in the context of risk management and there was a need for them to adapt to the rapid changes in technology. ‘’The sophistication level of the regulatory authorities will also need to increase commensurate with the business sector and talent. Technology, and technologically savvy talent, will be at a premium. And that’s true in the private sector, and that’s true in the public sector,’’ he said. Blake said in the Asia-Pacific region, the regulatory agencies were generally viewed as being quite skilful. ‘’When you look globally, obviously there are varying levels of sophistication of markets. This brings an opportunity globally to share best practices and competencies,’’ he said.

‘’One of the things that we’re looking at is how do you bring the most sophisticated actors in the financial services space from the private sector together in a knowledge exchange with some of the key supervisory bodies,’’ Blake said. ‘’It is absolutely in the best interests of the business sector that their corresponding regulator understands as closely as they do their activities and the technologies they’re using to conduct those activities. So, it is in the mutual best interest to share that information and to try and level set. That is a rather large challenge, but it’s something that we as a team are looking at currently and trying to devote some time to,’’ Blake said.

The WEF-Cambridge report on ‘The Future of Global Fintech: Towards Resilient and Inclusive Growth’, released in January, found that the majority of financial technology companies hold a positive view of their regulatory environment, with 63 per cent rating it as adequate. Additionally, 38 per cent of surveyed fintechs cited the regulatory environment as a major supporting factor for their operations and growth.

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Industry & Regulation

DGCA grounds Air India with Rs 80 lakh fine over pilot fatigue

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The Directorate General of Civil Aviation (DGCA) has levied a hefty fine of Rs 80 lakh on Air India for breaching regulations concerning flight duty time limitations (FDTL) and fatigue management systems of flight crew members. The decision followed a spot audit conducted by the aviation watchdog in January, during which evidence was gathered and fleet-wise random reports were scrutinized.

According to the DGCA, the audit findings revealed several violations by Air India, including instances where flights were operated with both flight crew members aged above 60 years. This contravenes the regulations outlined in the Civil Aviation Requirements pertaining to FDTL. Additionally, Air India was found to be deficient in providing adequate weekly rest, sufficient rest before and after ultra-long range flights, and adequate rest during layovers for the flight crew.

Furthermore, the audit uncovered instances of exceeding duty periods, inaccurately marked training records, and overlapping duties within the airline’s operations. These findings prompted the DGCA to issue a show cause notice to Air India on March 1, seeking an explanation for the violations identified. Despite Air India submitting a response to the show cause notice, the DGCA deemed it unsatisfactory.

Consequently, the aviation regulator proceeded to impose a substantial fine of Rs 80,00,000 on the airline for its non-compliance with regulatory requirements. The imposition of such a significant penalty underscores the DGCA’s commitment to upholding safety standards and ensuring regulatory compliance within the aviation sector.

Violations related to flight crew fatigue management and duty time limitations pose serious risks to flight safety and passenger well-being, necessitating strict enforcement measures by regulatory authorities. Air India, as a major player in the Indian aviation industry, is expected to adhere to the highest standards of safety and operational integrity. The airline’s failure to comply with regulatory mandates not only reflects poorly on its operational practices but also raises concerns regarding its commitment to ensuring the safety of its passengers and crew members.

In response to the fine imposed by the DGCA, Air India may be required to undertake corrective actions to address the identified deficiencies and prevent recurrence of similar violations in the future. Failure to rectify these issues could result in further penalties or regulatory sanctions against the airline, potentially impacting its operational capabilities and reputation within the industry.

Overall, the DGCA’s enforcement action against Air India underscores the critical importance of regulatory oversight in maintaining the safety and integrity of the aviation sector. It serves as a reminder to all airlines to prioritize compliance with regulatory requirements and uphold the highest standards of safety and operational excellence in their operations.

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Industry & Regulation

Government trims stake in 5 public banks to comply with Sebi rule

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Five public sector lenders, including Bank of Maharashtra, Indian Overseas are gearing up to reduce the government’s stake in them to less than 75 per cent to meet the Securities and Exchange Board of India’s (Sebi) minimum public shareholding (MPS) norms, revealed Financial Services Secretary Vivek Joshi. As of March 31, 2023, only four out of 12 public sector banks (PSBs) were compliant with the MPS norms, Joshi informed PTI in an interaction.

Delhi-based Punjab & Sind Bank holds the highest government stake at 98.25 per cent, followed by Chennai-based Indian Overseas Bank at 96.38 per cent, UCO Bank at 95.39 per cent, Central Bank of India at 93.08 per cent, and Bank of Maharashtra at 86.46 per cent. Sebi mandates all listed companies to maintain an MPS of 25 per cent but has granted state-owned banks a special forbearance until August 2024 to meet this requirement.

Joshi outlined various options available to banks to reduce the government’s stake, including follow-on public offerings or Qualified Institutional Placements, emphasizing that each bank would make decisions based on market conditions and the best interests of shareholders. He indicated ongoing efforts to meet the MPS requirement but refrained from providing a specific timeline.

In a separate directive, the finance ministry has instructed all state-owned banks to review their gold loan portfolio due to instances of non-compliance with regulatory norms. The Department of Financial Services (DFS) has urged banks to address concerns such as disbursement of gold loans without requisite collateral and anomalies in fee collection and repayment. Banks have been advised to conduct a thorough review of their gold loan activities over the past two years to ensure compliance with regulations and internal policies.

The advisory comes amid record-high gold prices, with the price of 10 grams of gold surging from Rs 63,365 to Rs 67,605 in the last month alone. Major lenders like State Bank of India (SBI), Punjab National Bank (PNB), and Bank of Baroda (BOB) have significant exposures to the gold loan segment, highlighting the importance of regulatory compliance in this area.

The move to reduce the government’s stake in public sector lenders is aimed at aligning with Sebi’s regulatory requirements and enhancing transparency and accountability in the banking sector. By increasing the public float, these banks aim to diversify ownership, improve liquidity, and attract more institutional and retail investors, thereby strengthening their market position.

Regarding the review of gold loan portfolios, the directive from the finance ministry underscores the importance of adherence to regulatory norms and internal policies to mitigate risks associated with lending against gold collateral. With gold prices reaching record levels, ensuring proper collateralization and risk management practices becomes imperative for banks to safeguard their loan portfolios and maintain financial stability. As public sector banks embark on initiatives to meet regulatory requirements and enhance risk management practices, these efforts are expected to contribute to the overall resilience and efficiency of India’s banking sector. Strengthening compliance frameworks and promoting transparency will not only bolster investor confidence but also support sustainable growth and development in the financial markets.

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Tech

Big Tech Opposes Digital Competition Law’s Ex-Ante Norms

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Big Tech firms such as Google, Apple, Flipkart, Amazon, and Uber have opposed ex-ante regulation while responding to the suggestions of the expert committee on digital competition law. While Twitter and Paytm are among those in favour, the latter in its stakeholder submission said it was in favour as long as only large digital enterprises with a critical mass were subject to the regulations.

The Ministry of Corporate Affairs had invited public comments on the expert committee report and the draft Bill.

While stressing that ex-ante regulation for the e-commerce sector may be untimely and excessive and may lead to overregulation, Amazon said in its stakeholder submission that it was already heavily regulated by the foreign direct investment policy, which mandates that it can only act as an online marketplace and not as a seller, and that it should provide fair terms to all sellers.

Key criterion Systemically significant digital enterprises would be those with:

  • Turnover in India of not less than Rs 4,000 crore
  • Global turnover of not less than $30 billion
  • Gross merchandise value in India of not less than Rs 16,000 crore
  • Global market capitalisation of not less than $75 billion
  • At least 10 million end users for its core digital service
  • 10,000 business users for its core digital service

 

Apple India, while batting for a light touch regime that promotes innovation, said CCI should also consider opening a regional office in Bengaluru in order to get easy access to the technology ecosystem of the country. Flipkart, on similar lines, has said that the existing ex-post regime in India is well-equipped to effectively regulate digital markets in India. “A one-size fits-all approach similar to the DMA model would be unsuitable for effective regulation of digital markets since it remains untested,” Flipkart’s response to stakeholders comment said. The e-tailer was referring to the European Digital Markets Act.

MakeMyTrip said that it was in favour of ex-ante regulation only to the extent that they were made applicable to select large horizontal platforms that have created economy-wide ecosystems.

The expert committee has recommended that the draft Bill should only regulate enterprises that have a ‘significant presence’ in the provision of a core digital service in India and the ability to influence the Indian digital market. The discussion around the digital competition law comes amid a global scrutiny of Google, Apple, Facebook, Amazon, and others for allegedly abusing their market position using chunks of user data.

Last year, the Competition Commission of India (CCI) slapped Google with penalties of Rs 936.4 crore and Rs 1,337.8 crore in two separate cases.

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