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Competition and Regulation in India, 2017 Leveraging Economic Growth Through Better Regulation Competition and Regulation in India, 2017 Leveraging Economic Growth Through Better Regulation Published by: & CUTS Institute for Regulation & Consumer Unity & Trust Society Competition D-217, Bhaskar Marg, Bani Park, D-72, First Floor, Hauz Khas Jaipur 302 016, India New Delhi 110 016, India Ph: +91.141.2282821 Ph: +91.11.26863022/23, 41621232 Fax: +91.141.2282485 Email: [email protected] Email: [email protected] Website: www.circ.in Website: www.cuts-international.org CUTS offices also at Kolkata, Chittorgarh and New Delhi (India); Lusaka (Zambia); Nairobi (Kenya); Accra (Ghana); Hanoi (Vietnam); Geneva (Switzerland); and Washington DC (USA) Edited by: Pradeep S Mehta Secretary General, CUTS International Citation: Mehta, Pradeep S (2018), Competition and Regulation in India, 2017 Book, XII+194, CUTS, Jaipur Printed by: Jaipur Printers P. Ltd. Jaipur 302001 ISBN: 978-81-8257-255-3 © CUTS, 2018 Any reproduction in full or part must indicate the title of the Report, name of the publisher as the copyright owner, and a copy of such publication may please be sent to the publisher. #1804, Suggested Contribution: M395/US$50 Contents Foreword ............................................................................................................. i Preface ............................................................................................................... iii Editor’s Note ...................................................................................................... v Abbreviations .................................................................................................... ix Chapter 1: An Overview ............................................................................... 1 India’s Present Macroeconomic Status ................................... 1 Reform Status in a Nutshell .................................................. 14 Reports on Competition and Regulation in India ............... 18 Overview of the 2017 Report .................................................. 22 Conclusion ................................................................................. 28 Chapter 2: Perception and Awareness Reporting.................................. 31 Introduction ............................................................................... 31 Data and Survey Design ........................................................ 31 Composition of Survey Respondents ...................................... 32 Analysis of Survey Findings .................................................. 33 Awareness on Competition and Regulatory Issues ............. 42 Nature and Impact of Government Policies ........................ 44 Conclusion ................................................................................. 46 Chapter 3: Implications of Competition Reforms in Wheat Sector on Consumers and Producers in Bihar and Rajasthan .... 49 Introduction ............................................................................... 49 Overview of Wheat Sector in Rajasthan and Bihar .......... 51 Reforms in the Wheat Sector in Bihar and Rajasthan and Implication on Beneficiaries ........................ 52 Conclusion ................................................................................. 61 Chapter 4: GM Cotton Seeds: Emerging Jurisprudence vis-à-vis Competition, Price Control and Patent Licencing .............................................................. 91 Introduction ............................................................................... 91 Recent Developments ............................................................... 92 Examining Contentious Issues ............................................. 100 Chapter 5: Fair Reasonable and Non-Discriminatory Licensing for Standard Essential Patents and Competition with Special Reference to India’s ICT Sector ................... 113 Introduction ............................................................................. 113 Standard Essential Patents and the Rationale of FRAND .............................................................. 114 Meaning of FRAND ............................................................... 116 Methodologies of Determination of FRAND ....................... 120 SEP Licencing and FRAND Royalties in India ................ 123 Possible Implications on Innovation and Competition in the Indian ICT Sector ................................ 125 Conclusion and Recommendations ....................................... 127 Chapter 6: Need for Proportionate Regulation of Digital Financial Services in India ..................................... 139 Introduction ............................................................................. 139 Regulation of PPI Issuers ..................................................... 141 Access to Critical Payments Platforms .............................. 144 Regulation of Payments Banks vis-à-vis Universal Banks..................................................................... 148 The Case for Proportionate Regulation .............................. 150 Adopting Risk-based Regulation ........................................... 153 Chapter 7: The Role of Competition Policy in Promoting Sustainable Development Goals .......................................... 161 Introduction ............................................................................. 161 Sustainable Development Goals ........................................... 163 Linking Competition Policy and SDGs ............................... 165 Conclusion ............................................................................... 171 Chapter 8: Epilogue .................................................................................. 175 Common Challenges across Sectors ..................................... 178 Clarity on the Jurisdiction of Competition Commission of India .............................................................. 179 Minimising Price Regulations by the Government........... 181 Unfinished Agenda ................................................................. 184 Promoting Innovation by Harmonising Competition and IP Laws ..................................................... 186 National Energy Policy 2017 ............................................... 188 Rules for Distributed Ledger Technology, Blockchain and Cryptocurrencies ........................................ 189 Implementation of National Competition Policy ................ 191 In Lieu of Conclusion ............................................................ 191 List of Tables, Boxes and Figures Tables 1.1: Macroeconomic Indicators and Projections ...................................... 3 1.2: Growth Table (Sectoral GVA, Overall GDP)................................... 8 3.1: Some Salient Features of the Policy Regime Across Agriculture Value Chain ..................................................... 50 3.2: Wheat Production .............................................................................. 52 3.3: SRR – prior year actuals and target set for wheat by the Seed Plan ................................................................... 58 4.1: Snap Shot of Price Control Initiatives by Various State Governments ...................................................... 102 6.1: Initiatives by Government of India to Promote Digital Financial Services .............................................................. 140 6.2: Payments Systems and their Interface with Non-banks .......... 144 6.3: Entry and Operating Conditions on Peer-to-Peer Lending Platforms ..................................................... 147 6.4: Key Features of Payments Banks ................................................ 148 6.5: Competition Distortionary Regulations for Payments Banks ... 149 6.6: Approach to Regulation of Retail Payments ................................ 151 6.7: Models of Regulatory Sandbox ....................................................... 154 6.8: Progressive Approach to ‘Smart Regulation’ ............................... 155 Boxes 4.1: Allegations against MMBL and its Defence before CCI.............. 93 4.2: Restrictive Conditions in the Licencing Agreement ..................... 94 4.3: Important features of CSPCO, 2015 ............................................... 96 4.4: Relevant Features of the Draft GM Licencing Guidelines and Format ................................................... 98 4.5: Guidelines for Examination of Biotechnology Applications for Patent: Relevant Features................................. 107 4.6: Stated Position of NSAI ................................................................. 109 Figures 1.1: Indian Economy: A Snapshot............................................................. 3 1.2: Economic Survey 2017-2018: GDP Growth ..................................... 6 1.3: Additional New Individual Income Tax Filers ................................ 7 1.4: 50 Percent Increase in New Taxpayers under GST ..................... 7 1.5: Economic Survey 2017-2018: Foodgrains Production ..................... 9 1.6: Overall Economy vs Farm Sector ................................................... 10 1.7: Manufacturing & Investment and Exports ................................... 13 2.1: Response of Consumers in Indian States ...................................... 32 2.2: Composition of Stakeholders............................................................. 33 2.3: Availability of Choices in Various Products ................................