MUMBAI | 4 DECEMBER 2016 ECONOMY 5. <

India lacks laws toprotect customers ofdigital transactions,say expertsALNOOR PEERMOHAMED & KARAN CHOUDHURYBengaluru/ New Delhi, 3 December

India lacks laws to protect con-sumers if they lose money dur-ing digital transactions even asthe government pushes for aless-cash economy after it with-drew ~500 and ~1,000 currencynotes as legal tender.

The Narendra Modi govern-ment’s demonetisation movemight have warranted anincrease in transaction activityon digital wallets massively, butmeasures to ensure the under-lying cyber security parametersfor digital payments are stillkept largely under the ambit ofthe Information TechnologyAct. “We don’t have any dedi-cated law on digital payments.That’s very impor-tant to grant com-plete legality andremove and doubtsand clarificationspertaining to legalefficacies and legalvalidity of digitalpayments,” saysPavan Duggal, anadvocate in theSupreme Court specialising incyber law.

While the Reserve Bank ofIndia (RBI) usually sets securityand privacy standards for banksin the country, digital walletssuch as Paytm, FreeCharge andMobiKwik fall under the cate-gory of non-banking financialcorporations (NBFCs) exclud-ing them from this. For fintechcompanies in India today, secu-rity compliance falls underSection 43 A of the IT Act.

Today, transactions betweena user and a mobile wallet serv-ice provider are merely con-tractual agreements which asDuggal puts it can always berepudiated. There’s a height-ened need to legally back digital

payments in India, not only toensure the safety of consumermoney but also for the safety ofthese companies themselves.

While maintaining securitystandards for fintech compa-nies falls under the data protec-tion law of the IT Act, the lack ofan enforcement mechanismhinders any good this can do.

Since the demonetisationannouncement, digital walletfirms such as Paytm have seenas much as 35 million transac-tions by users to either buygoods and services or transferfunds to another account. RivalFreeCharge has tied up policeforces of Mumbai to pay trafficfines using its platform.

According to Bengaluru-based think tank Centre forInternet and Society (CIS), their

research shows thatsome of India’slargest technologycompanies still donot comply withSection 43 A.

“We have a mini-mal data protectionlaw in our IT Act andthat will apply to allthe fintech players.

But, our ISPs (intenet serviceproviders) and telcos don’t com-ply with Section 43 A. So youcan imagine compliance will beeven lower in the fintech sec-tor,” says Sunil Abraham, exec-utive director, CIS. VijayShekhar Sharma, the founderof Paytm, says there is a dis-pute mechanism similar towhat is done with credit or deb-it cards that firms such as hisfollow when a customer has anissue.

“Regulation in digital mon-ey works just like in the case ofcards. It is the issuer, in thiscase, the wallet companies thathas to resolve the problem. Ifnot, the next stop is consumercourt,” says Sharma.

US Congress to enshrine defenceties with India in new amendmentAJAI SHUKLANew Delhi, 3 December

With President Barack Obamaand the India-friendly USSecretary of Defense Ashton

Carter about to demit office, theirunswervingly pro-India defence poli-cy is about to be enshrined into USlegislation.

This week, top US lawmakers fromboth houses of Congress — the Senateand the House of Republicans — joint-ly agreed to an amendment in a majorbudget Bill that will formalise andconsolidate India’s status as a majorUS partner.

The amendment is entitled“Enhancing Defense and SecurityCooperation with India” (hereafter“India amendment”). It is a part of theNational Defense Authorization Actof 2017 (NDAA), that allocates fundingeach year to the US military. Like sev-eral small, but important, US Bills, theIndia amendment is piggybacking onthe NDAA (which must be passed byCongress) to avoid the fate of numer-ous small Bills that are lost forever inWashington’s legislative hubbub.

The classic example of this piggy-backing was the passage of theinnocuously titled “Naval VesselTransfer Act” in 2008, which has leg-islatively committed the US to ensur-ing Israel enjoys a “qualitative mili-tary edge” over every potentialadversary.

Now, in a similar fashion, the USCongress is binding future Americanpresidents, whatever be their alliancesor foreign policies, to nurturing US-India defence ties.

The India amendment directs theUS Department of Defense (thePentagon) and Department of State tosustain and prioritise defence coop-eration with India through a specifiedseries of policies and actions.

These include: Recognising India’sstatus as “a major defense partner ofthe United States”, designating an offi-cial to ensure the success of the“Framework for the United States-India Defense Relationship” to“approve and facilitate the transfer ofadvanced technology” and “strength-en the effectiveness of the US-IndiaDefense Trade and TechnologyInitiative (DTTI) and the durability of the [Pentagon’s] “India RapidReaction Cell”.

All these mechanisms were insti-tuted by the Obama administrationto galvanise US-India defence rela-tions, but there was no guarantee thatsubsequent US governments wouldfollow them. The passage of the India

amendment makes it obligatory forall US administrations to do so.

According to officials closelyinvolved with negotiating the Indiaamendment, the NDAA is likely topass the House of Representatives andthe Senate next week and be signedinto law by President Obama soonthereafter.

The passage of this amendment,which had been cleared by the Houseof Representatives in May, but scut-

tled — only temporarily, it nowemerges — by the Senate in June,underlines the bipartisanCongressional consensus that the US-India relationship is, in the words oftheir president, “the defining part-nership of the 21st century”.

“For the last decade, a consensushas been growing among America’ssoldiers, spies, and diplomats that astronger and more capable Indian mil-itary is in America’s national securityinterest. This legislation demonstratesthat this realisation has spread toAmerica’s elected representatives aswell,” said Ben Schwartz, the US-IndiaBusiness Council’s defense and aero-space head, who was formerly Indiahead in the Office of the Secretary ofDefense. There has been criticismthat the India amendment makes nochanges to the US Arms ExportControl Act, which places India in thecategory of countries to which armssales require a 30-day notification tothe US Congress; rather than the morefavoured countries that require only a15 day notification.

In fact, that would be a problemonly for countries that have such ahigh volume of arms purchases fromthe US that they cannot wait an extra15 days. India, in contrast, as seen inall recent purchases of US weaponry,actually takes several years to con-clude a contract after the “congres-sional notification”.

US officials also point out this dis-

tinction has absolutely no affect onthe level of technology transfer.

The passage of the India amend-ment has been bumpy, because ofinfighting over unconnected issueswithin the bitterly divided USCongress. US legislative procedurerequires both houses to pass similarversions of the India amendment,after which a joint conference recon-ciles the wording before it is votedon.

This process encountered a hic-cup in summer. After the House ofRepresentatives passed the Indiaamendment in May, entitled “USIndia Defense Technology andPartnership Act”, the Senate failed topass the companion bill, entitled“Advancing U.S.-India DefenseCooperation Act”. Now, however, ajoint House-Senate “conference”,convened to hammer out the finalform of the NDAA, mutually agreed toinclude the India amendment, whichforms Section 1292 of the NDAA.

The US Congress will now beclosely monitoring the relationship.The India amendment mandates:“Not later than 180 days after the dateof the enactment of this Act (theNDAA), and annually thereafter, theSecretary of Defense and Secretary ofState shall jointly submit to[Congress] a report on how the UnitedStates is supporting its defence rela-tions with India in relations to theactions described…”

ENHANCING DEFENCE TIES| India recognised as “major

defence partner of the UnitedStates”

| Designated US defence official toensure success of US-IndiaFramework Agreement on Defence

| Support combined US-India militaryplanning for non-combat missions

| Promote US-India weapons inter-operability

| Enhance cooperation with India“to advance United States interestsin the South Asia and greaterIndo-Asia-Pacific regions”

| Strengthen “Defence Trade andTechnology Initiative”

| Develop “mutually agreeablemechanisms” to verify security ofUS-supplied defence equipmentand technology

US Secretary of Defense Ash Carter meets India’s Defence Minister Manohar (left) Parrikar for a bilateral at the IISSShangri-La Dialogue in Singapore in June 2016 REUTERS FILE PHOTO

Since thedemonetisationannouncement,digital walletfirms such asPaytm have seenas much as 35 mn transactions byusers

Country’s first coastal highway:BJP, Shiv Sena fight for credit SANJAY JOG

Ahead of the BrihanMumbaiMunicipal Corporation (BMC)election slated for early 2017,the ruling Bharatiya JanataPartyand Shiv Sena bothwant to take credit for thecountry’s first 29.22-kmcoastal highwayproject.Small patches of roads invarious Indian coastal stateshave a sea viewbut the BMCproject, estimated to cost~11,000 crore, will haveabout40 hectares of greenarea — gardens, parks,jogging and cycling tracksalong the highway. BMChaslaunched the geo-technicalsurvey for the project.Maharashtra ChiefMinisterDevendra Fadnavis hasrepeatedly said the entireprojectwould becomeoperational byDecember2019 but Shiv Sena PresidentUddhavThackeray, whoclaims to have had the idea wayback in 2013, lastweeksaid only the firstsection of 13.43 km will be thrown open byDecember 2019.

TWO PHASES:FOUR PACKAGES

The phased development came afterstrong opposition from the locals andenvironmentalists. It is now beingtaken up in two phases. Besides, thehighway has been shortened by about5 km, skipping mangroves

PHASE I:Princess Street in southMumbai-South-end ofBandra Worli sea link:About 46 companies havesubmitted expressions ofinterest

TWO PACKAGES:Underground tunnel

from Princess Street flyoverto Priyadarshani Park

Flyover fromPriyadarshani Park toBaroda Palace

PHASE-II AND TWOMORE PACKAGES

Bandra-Versova sea link: MSRDChas invited tenders

Bangur Nagar-Kandivli: BMC isyet to finalise the alignment

PrincessStreet

Bandra- WorliSea Link

Bangur Nagar

Kandivli

The project development deadline of October, 2016 was missed due to environmental issues. BMC with revised plan maycomplete the tendering process for the first phase by March next year. The actual construction will begin after the BMC election,slated for February-March, 2017, is over. This stretch is expected to be completed by December 2019 while the remaining sectionscould take another three years

Versova

PriyadarshaniPark

Congress to clear bill next week, President Obama will sign into law thereafter

Sartaj Aziz early arrival sparks Indo-Pak rapprochement hopeARCHIS MOHANAmritsar, 3 December

Sartaj Aziz (pictured), advisor tothe Pakistan prime minister onforeign affairs, landed earlierthan originally scheduled toattend a dinner hosted by PrimeMinister Narendra Modi for dig-nitaries attending the Heart ofAsia conference here onSaturday, which sparked hopesthat the strained relationshipbetween the two countriesmight improve.

The Heart of Asia annualconference, an internationaleffort to help Afghanistan in itstransition from the war-tornpast to a better future, is beingheld in the shadow of recent ter-ror attacks in the subcontinentand escalation of tension on theIndia-Pakistan border.

Aziz was slated to land inAmritsar on Sunday morning.Government sources, both onthe Pakistani as well as theIndian side, claimed that Azizadvanced his itinerary ostensi-bly to beat the early morningfog but declined to commentofficially.

Sources did not rule out a‘pull aside’ meeting betweenAziz and Modi at the dinner lat-er in the evening. Recent yearshave witnessed thaws in India-Pakistan relations emerge fromsuch meetings.

India and Pakistan have hadfraught bilateral relations after

the terror attack on thePathankot airbase in January,which worsened after the Uriterror attack that was followedby the “surgical strike” by theIndian Army along the Line ofControl. Cross-border shellinghas continued ever since, ashave terror attacks in Jammuand Kashmir.

On Friday, Indian FinanceMinister Arun Jatiley, who willlead the Indian delegation atthe conference since ExternalAffairs Minister Sushma Swarajis ailing, said Pakistan shouldintrospect as to why tensionshave worsened between the twocountries.

Apart from this, India andAfghanistan are also likely toannounce an air-cargo serviceto improve trade. Afghanistan islandlocked, and relies on theKarachi port in Pakistan for itsforeign trade. While Pakistanallows Afghanistan to use theland route to export to India,Islamabad does not provide thesame facility to Indian exportsto Afghanistan.

Afghan Director General forMacro Fiscal Policies KhalidPayenda has indicated that thetwo sides were close to startingthe air cargo service that wouldfly over Pakistan.

President of AfghanistanAshraf Ghani landed in theevening. Modi and Ghani visit-ed the Golden Temple. Azizsent a bouquet to Swaraj to wishher speedy recovery. The lastbilateral visit by a foreign min-ister of either of the two coun-tries was when Swaraj visitedIslamabad for the Heart of Asiaconference in December 2015.The two neighbours had thenagreed to revive their bilateraldialogue, which the Pathankotterror attack derailed.

| Sartaj Aziz, advisor to thePakistan prime ministeron foreign affairs wasoriginally scheduled toland in Amritsar onSunday morning for theHeart of Asia annualconference

| He landed earlier thanoriginally scheduled toattend a dinner hosted by Prime Minister Narendra Modi

GIVING PEACEANOTHER CHANCE?