India Regulatory Brief: States to Regulate Taxi Aggregators, Key Land Reform Bills Passed in Rajasthan

State Governments Seek to Regulate Taxi Aggregators

Last week Karnataka became the first state to introduce state-prescribed fares for taxi aggregators. In addition to set fares, taxis will have to fix digital meters with printers and register themselves with local transport authorities. Maharashtra, with two of the largest taxi hailing markets – Mumbai and Pune – is set to follow this example. According to a source in the Maharashtra state government, their proposed rules go beyond the scope of Karnataka’s. These will include fare determination based on the cost of the vehicle and its engine capacity; regulation of taxi numbers through an induction schedule, which could adversely impact the employment of driver partners of taxi aggregators; and the ability to cancel licenses for non-compliance.

Different states have responded differently to the entry of transport aggregators. For instance, both Uber and Ola have capitalized on the Delhi government’s call for car sharing as the city struggles to combat its high pollution. Ride sharing services were introduced in Delhi in January with no government resistance, unlike in Karnataka.

The taxi hailing market in India was US $1 billion in annual gross booking value in February 2016 according to RedSeer Management Consulting. This is why Uber and Ola have so far focused on undercutting each other’s pricing to build their respective customer bases. Strict regulation of taxi prices will hurt their business strategies, though benefiting customers in the long run.

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Rajasthan Passes Major Land Reform Bills

Rajasthan’s state legislative assembly passed two land reform bills on April 4, significantly augmenting transparency in the sector.

The first bill, the Rajasthan Urban Land (Certification of Titles) Bill of 2016, facilitates statutory backing to land records and effectively solidifies land and property ownership. Apart from creating a more efficient land market, the bill also prevents unnecessary litigation and marks clear periods of tenure for the concerned party. Thus, the bill provides further confirmation of someone’s right to land, making the trade and/or sale of these rights easier.

The second bill, the Rajasthan Land Pooling Schemes Bill, provides for the easy aggregation of small land holdings. It argues that these small irregular parcels of land prevent proper infrastructure development. In order to do so, the bill allows the government to consolidate small land holdings, while simultaneously giving equivalent shares of development land to the land holders. 

In India, there exists a system of “presumed ownership”, where the risk of fraud is taken on by the buyer with no guarantees provided by the state. Courts are often riddled with unresolved disputes due to such structural faults, an issue which has been corrected by the aforementioned bills in Rajasthan. The absence of a guaranteed system of title certification is something that has hindered economic growth, development, social justice, and judicial efficiency for years. India needs such a system in place for seamless municipal tax revenue collection (due to the clear ownership of taxable property) and to ensure better public infrastructure.

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WhatsApp’s Encryption Service Raises Concerns for the Government

The introduction of end-to-end encryption services by WhatsApp may serve as a clarion call for the government to reassess the existing regulatory framework in India. Over-The-Top (OTT) services like WhatsApp, Skype, Facebook Messenger, and Viber are neither classified as telecom or internet service providers, thus escaping any regulatory scrutiny.

WhatsApp’s latest 256-bit end-to-end encryption update means that all user calls and content via text, video, image, and other files can only be accessed by the intended recipient. WhatsApp also does not possess the decryption key, guaranteeing absolute user privacy from both WhatsApp and ‘lawful interception’ by the government. Such secrecy is a double edged sword, as witnessed in the Apple v. FBI case in the US, where government intelligence services demanded access to encrypted data for security purposes. WhatsApp, which is accessed on all operating systems, with over a billion monthly active users worldwide and 70 million Indian users, has pushed the debate over a much wider realm.

Presently, the government may consider recommendations from a 2015 OTT Consultation Paper put out by the Telecom Regulatory Authority of India (TRAI) that OTT services be classified as either communication service providers or application service providers – subject to licensing requirements, including enabling ‘lawful interception’. While Section 69 of the Information Technology Act of 2000 directs intermediaries like WhatsApp to allow interception, monitoring and decryption, compliance will be impossible on account of the end-to-end encryption, and may be out of their purview as the company is based outside India.

Managing Your Accounting and Bookkeeping in India
In this issue of India Briefing Magazine, we spotlight three issues that financial management teams for India should monitor. Firstly, we examine the new Indian Accounting Standards (Ind-AS) system, which is expected to be a boon for foreign companies in India. We then highlight common filing dates for most companies with operations in India, and lastly examine procedures and regulations for remitting profits from India.

Using India’s Free Trade & Double Tax Agreements
In this issue of India Briefing magazine, we take a look at the bilateral and multilateral trade agreements that India currently has in place and highlight the deals that are still in negotiation. We analyze the country’s double tax agreements, and conclude by discussing how foreign businesses can establish a presence in Singapore to access both the Indian and ASEAN markets.

Passage to India: Selling to India’s Consumer Market In this issue of India Briefing magazine, we outline the fundamentals of India’s import policies and procedures, as well as provide an introduction to engaging in direct and indirect export, acquiring an Indian company, selling to the government and establishing a local presence in the form of a liaison office, branch office, or wholly owned subsidiary. We conclude by taking a closer look at the strategic potential of joint ventures and the advantages they can provide companies at all stages of market entry and expansion.

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