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MUMBAI | 4 DECEMBER 2016 ECONOMY 5 . < India lacks laws to protect customers of digital transactions, say experts ALNOOR PEERMOHAMED & KARAN CHOUDHURY Bengaluru/ New Delhi, 3 December India lacks laws to protect con- sumers if they lose money dur- ing digital transactions even as the government pushes for a less-cash economy after it with- drew ~500 and ~1,000 currency notes as legal tender. The Narendra Modi govern- ment’s demonetisation move might have warranted an increase in transaction activity on digital wallets massively, but measures to ensure the under- lying cyber security parameters for digital payments are still kept largely under the ambit of the Information Technology Act. “We don’t have any dedi- cated law on digital payments. That’s very impor- tant to grant com- plete legality and remove and doubts and clarifications pertaining to legal efficacies and legal validity of digital payments,” says Pavan Duggal, an advocate in the Supreme Court specialising in cyber law. While the Reserve Bank of India (RBI) usually sets security and privacy standards for banks in the country, digital wallets such as Paytm, FreeCharge and MobiKwik fall under the cate- gory of non-banking financial corporations (NBFCs) exclud- ing them from this. For fintech companies in India today, secu- rity compliance falls under Section 43 A of the IT Act. Today, transactions between a user and a mobile wallet serv- ice provider are merely con- tractual agreements which as Duggal puts it can always be repudiated. There’s a height- ened need to legally back digital payments in India, not only to ensure the safety of consumer money but also for the safety of these companies themselves. While maintaining security standards for fintech compa- nies falls under the data protec- tion law of the IT Act, the lack of an enforcement mechanism hinders any good this can do. Since the demonetisation announcement, digital wallet firms such as Paytm have seen as much as 35 million transac- tions by users to either buy goods and services or transfer funds to another account. Rival FreeCharge has tied up police forces of Mumbai to pay traffic fines using its platform. According to Bengaluru- based think tank Centre for Internet and Society (CIS), their research shows that some of India’s largest technology companies still do not comply with Section 43 A. “We have a mini- mal data protection law in our IT Act and that will apply to all the fintech players. But, our ISPs (intenet service providers) and telcos don’t com- ply with Section 43 A. So you can imagine compliance will be even lower in the fintech sec- tor,” says Sunil Abraham, exec- utive director, CIS. Vijay Shekhar Sharma, the founder of Paytm, says there is a dis- pute mechanism similar to what is done with credit or deb- it cards that firms such as his follow when a customer has an issue. “Regulation in digital mon- ey works just like in the case of cards. It is the issuer, in this case, the wallet companies that has to resolve the problem. If not, the next stop is consumer court,” says Sharma. US Congress to enshrine defence ties with India in new amendment AJAI SHUKLA New Delhi, 3 December W ith President Barack Obama and the India-friendly US Secretary of Defense Ashton Carter about to demit office, their unswervingly pro-India defence poli- cy is about to be enshrined into US legislation. This week, top US lawmakers from both houses of Congress — the Senate and the House of Republicans — joint- ly agreed to an amendment in a major budget Bill that will formalise and consolidate India’s status as a major US partner. The amendment is entitled “Enhancing Defense and Security Cooperation with India” (hereafter “India amendment”). It is a part of the National Defense Authorization Act of 2017 (NDAA), that allocates funding each year to the US military. Like sev- eral small, but important, US Bills, the India amendment is piggybacking on the NDAA (which must be passed by Congress) to avoid the fate of numer- ous small Bills that are lost forever in Washington’s legislative hubbub. The classic example of this piggy- backing was the passage of the innocuously titled “Naval Vessel Transfer Act” in 2008, which has leg- islatively committed the US to ensur- ing Israel enjoys a “qualitative mili- tary edge” over every potential adversary. Now, in a similar fashion, the US Congress is binding future American presidents, whatever be their alliances or foreign policies, to nurturing US- India defence ties. The India amendment directs the US Department of Defense (the Pentagon) and Department of State to sustain and prioritise defence coop- eration with India through a specified series of policies and actions. These include: Recognising India’s status as “a major defense partner of the 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 of advanced technology” and “strength- en the effectiveness of the US-India Defense Trade and Technology Initiative (DTTI) and the durability of the [Pentagon’s] “India Rapid Reaction Cell”. All these mechanisms were insti- tuted by the Obama administration to galvanise US-India defence rela- tions, but there was no guarantee that subsequent US governments would follow them. The passage of the India amendment makes it obligatory for all US administrations to do so. According to officials closely involved with negotiating the India amendment, the NDAA is likely to pass the House of Representatives and the Senate next week and be signed into law by President Obama soon thereafter. The passage of this amendment, which had been cleared by the House of Representatives in May, but scut- tled — only temporarily, it now emerges — by the Senate in June, underlines the bipartisan Congressional consensus that the US- India relationship is, in the words of their president, “the defining part- nership of the 21st century”. “For the last decade, a consensus has been growing among America’s soldiers, spies, and diplomats that a stronger and more capable Indian mil- itary is in America’s national security interest. This legislation demonstrates that this realisation has spread to America’s elected representatives as well,” said Ben Schwartz, the US-India Business Council’s defense and aero- space head, who was formerly India head in the Office of the Secretary of Defense. There has been criticism that the India amendment makes no changes to the US Arms Export Control Act, which places India in the category of countries to which arms sales require a 30-day notification to the US Congress; rather than the more favoured countries that require only a 15 day notification. In fact, that would be a problem only for countries that have such a high volume of arms purchases from the US that they cannot wait an extra 15 days. India, in contrast, as seen in all 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 on the level of technology transfer. The passage of the India amend- ment has been bumpy, because of infighting over unconnected issues within the bitterly divided US Congress. US legislative procedure requires both houses to pass similar versions of the India amendment, after which a joint conference recon- ciles the wording before it is voted on. This process encountered a hic- cup in summer. After the House of Representatives passed the India amendment in May, entitled “US India Defense Technology and Partnership Act”, the Senate failed to pass the companion bill, entitled “Advancing U.S.-India Defense Cooperation Act”. Now, however, a joint House-Senate “conference”, convened to hammer out the final form of the NDAA, mutually agreed to include the India amendment, which forms Section 1292 of the NDAA. The US Congress will now be closely monitoring the relationship. The India amendment mandates: “Not later than 180 days after the date of the enactment of this Act (the NDAA), and annually thereafter, the Secretary of Defense and Secretary of State shall jointly submit to [Congress] a report on how the United States is supporting its defence rela- tions with India in relations to the actions described…” ENHANCING DEFENCE TIES | India recognised as “major defence partner of the United States” | Designated US defence official to ensure success of US-India Framework Agreement on Defence | Support combined US-India military planning for non-combat missions | Promote US-India weapons inter- operability | Enhance cooperation with India “to advance United States interests in the South Asia and greater Indo-Asia-Pacific regions” | Strengthen “Defence Trade and Technology Initiative” | Develop “mutually agreeable mechanisms” to verify security of US-supplied defence equipment and technology US Secretary of Defense Ash Carter meets India’s Defence Minister Manohar (left) Parrikar for a bilateral at the IISS Shangri-La Dialogue in Singapore in June 2016 REUTERS FILE PHOTO Since the demonetisation announcement, digital wallet firms such as Paytm have seen as much as 35 mn transactions by users Country’s first coastal highway: BJP, Shiv Sena fight for credit SANJAY JOG Ahead of the BrihanMumbai Municipal Corporation (BMC) election slated for early 2017, the ruling Bharatiya Janata Party and Shiv Sena both want to take credit for the country’s first 29.22-km coastal highway project. Small patches of roads in various Indian coastal states have a sea view but the BMC project, estimated to cost ~11,000 crore, will have about 40 hectares of green area — gardens, parks, jogging and cycling tracks along the highway. BMC has launched the geo-technical survey for the project. Maharashtra Chief Minister Devendra Fadnavis has repeatedly said the entire project would become operational by December 2019 but Shiv Sena President Uddhav Thackeray, who claims to have had the idea way back in 2013, last week said only the first section of 13.43 km will be thrown open by December 2019. TWO PHASES: FOUR PACKAGES The phased development came after strong opposition from the locals and environmentalists. It is now being taken up in two phases. Besides, the highway has been shortened by about 5 km, skipping mangroves PHASE I: Princess Street in south Mumbai-South-end of Bandra Worli sea link: About 46 companies have submitted expressions of interest TWO PACKAGES: Underground tunnel from Princess Street flyover to Priyadarshani Park Flyover from Priyadarshani Park to Baroda Palace PHASE-II AND TWO MORE PACKAGES Bandra-Versova sea link: MSRDC has invited tenders Bangur Nagar-Kandivli: BMC is yet to finalise the alignment Princess Street Bandra- Worli Sea Link Bangur Nagar Kandivli The project development deadline of October, 2016 was missed due to environmental issues. BMC with revised plan may complete 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 sections could take another three years Versova Priyadarshani Park Congress to clear bill next week, President Obama will sign into law thereafter Sartaj Aziz early arrival sparks Indo-Pak rapprochement hope ARCHIS MOHAN Amritsar, 3 December Sartaj Aziz ( pictured), advisor to the Pakistan prime minister on foreign affairs, landed earlier than originally scheduled to attend a dinner hosted by Prime Minister Narendra Modi for dig- nitaries attending the Heart of Asia conference here on Saturday, which sparked hopes that the strained relationship between the two countries might improve. The Heart of Asia annual conference, an international effort to help Afghanistan in its transition from the war-torn past to a better future, is being held in the shadow of recent ter- ror attacks in the subcontinent and escalation of tension on the India-Pakistan border. Aziz was slated to land in Amritsar on Sunday morning. Government sources, both on the Pakistani as well as the Indian side, claimed that Aziz advanced his itinerary ostensi- bly to beat the early morning fog but declined to comment officially. Sources did not rule out a ‘pull aside’ meeting between Aziz and Modi at the dinner lat- er in the evening. Recent years have witnessed thaws in India- Pakistan relations emerge from such meetings. India and Pakistan have had fraught bilateral relations after the terror attack on the Pathankot airbase in January, which worsened after the Uri terror attack that was followed by the “surgical strike” by the Indian Army along the Line of Control. Cross-border shelling has continued ever since, as have terror attacks in Jammu and Kashmir. On Friday, Indian Finance Minister Arun Jatiley, who will lead the Indian delegation at the conference since External Affairs Minister Sushma Swaraj is ailing, said Pakistan should introspect as to why tensions have worsened between the two countries. Apart from this, India and Afghanistan are also likely to announce an air-cargo service to improve trade. Afghanistan is landlocked, and relies on the Karachi port in Pakistan for its foreign trade. While Pakistan allows Afghanistan to use the land route to export to India, Islamabad does not provide the same facility to Indian exports to Afghanistan. Afghan Director General for Macro Fiscal Policies Khalid Payenda has indicated that the two sides were close to starting the air cargo service that would fly over Pakistan. President of Afghanistan Ashraf Ghani landed in the evening. Modi and Ghani visit- ed the Golden Temple. Aziz sent a bouquet to Swaraj to wish her speedy recovery. The last bilateral visit by a foreign min- ister of either of the two coun- tries was when Swaraj visited Islamabad for the Heart of Asia conference in December 2015. The two neighbours had then agreed to revive their bilateral dialogue, which the Pathankot terror attack derailed. | Sartaj Aziz, advisor to the Pakistan prime minister on foreign affairs was originally scheduled to land in Amritsar on Sunday morning for the Heart of Asia annual conference | He landed earlier than originally scheduled to attend a dinner hosted by Prime Minister Narendra Modi GIVING PEACE ANOTHER CHANCE?
