In 2023, India It introduced a series of revised regulations and policies that borrowed from European antitrust approaches and Chinese-style government surveillance, alarming executives and investors in the world’s most populous market. Additional regulations are on the horizon in 2024 as New Delhi continues its regulatory shift to more tightly control the technology sector.
Last year, the Goods and Services Tax (GST) council began imposing a 28% tax on online gaming, casinos and horse racing, severely hurting once-fast-growing fantasy sports startups in India. Major investors – including Peak
Kavin Mittal, founder of Indian messaging startup Rush, said the new tax seemed like a “bazooka” directed at his company. The law, which takes effect later in 2023, discourages “potential investments amounting to at least $4 billion in the next three to four years,” stifling the growth of the gaming sector, the investors wrote. MPL, a leading fantasy sports startup, has cut half its workforce.
Some Indian online gaming companies have since started exploring markets in South Africa and Latin America to sustain their business amid the new tax regime affecting their revenues in the home country.
“We never wanted to be in a situation where I might have to say what I’m going to say, which is that India, right now, doesn’t look like an economically viable business country for online gaming,” one of the founders told TechCrunch.
India will also enact a new telecommunications law in 2023, seeking to update its archaic rules from 1885 that were in place for the telegram era. The law gives New Delhi increased ability to monitor networks and traffic data for national security interests. Although it does not explicitly include OTT services like WhatsApp and Zoom, Meta India Policy Head Shivnath Thukral Warn the staff The government could enforce the law on meta services in the future.
Privacy advocates have warned that the new communications law gives India the power to undermine encryption and confidentiality.
Later this year, the Ministry of Electronics and IT will look to implement the Digital India Act, which seeks to replace the Information Technology Act of 2000 and oversee the market practices of big technology companies.
Streaming platforms like Netflix and Amazon Prime are also facing increased scrutiny over content deemed vulgar, with a proposal in November requiring companies to set up committees to rate individual shows and films.
With over a billion potential new customers, India has become a crucial growth market for global tech giants and investors alike. Giants such as Google, Meta, Amazon, Apple, Microsoft and Netflix have poured tens of billions of dollars into the country in a high-stakes race to capitalize on its enormous scale and capture the next phase of its growth.
Global venture capital, private equity and hedge funds have invested more than $100 billion in Indian startups in the last 10-12 years. India began introducing more protectionist policies nearly five years ago. Combined with the attractive incentives offered by New Delhi, this has fueled growth in domestic manufacturing capabilities.
Google CEO Sundar Pichai in December 2022 urged India to formulate regulations in a way that could help the country benefit from an open and connected internet. “It’s important to make sure you balance the safeguards you put in place for people and create innovative frameworks so businesses can innovate on top of the certainty of the legal framework,” he said.
In January 2023, the Ministry of Electronics and Information Technology proposed forcing social media platforms to remove content that the government’s Press Information Office deems “fake or false.” After strong opposition on freedom of expression grounds, a review in April enabled a government committee rather than the Board of Investment of Pakistan to identify “misleading” posts about the country.
In August, India gave the green light to its first data protection law, giving New Delhi more control over how tech companies handle Indian users’ data, while allowing some data transfers abroad. An industry group representing Apple, Google and others has requested an extended deadline for compliance from the IT ministry.
Later in 2023, India raised concerns among computer vendors by restricting imports of laptops, servers and consumer devices to boost domestic manufacturing. However, after initial concerns, several companies have committed to ramping up production lines in India.
In a move that has hit fintech startups, India’s central bank has raised risk weights on unsecured loans to slow the rapid growth in consumer credit. This came in the wake of a massive crackdown by the Reserve Bank of India on fintech startups in 2022 that affected several neobanks and card issuing companies.
“The RBI’s enforcement action against fintech companies and call for stricter regulations impacts their operating and revenue model,” PWC said in a report.
In September, telecom operators in India, the second-largest wireless market, would like internet companies to offset usage of their networks, a recommendation they made to the local regulator, echoing a view that is gaining some traction in other parts of India. world but also raises concerns about violating net neutrality.
Indian policymakers argue that regulations protect consumers. To be sure, the regulations proposed by New Delhi have not received backlash.
In a meeting with Sam Altman, co-founder of OpenAI, Modi and his officials assured the entrepreneur that India would take a “lite” approach to regulating AI, a person familiar with the discussion told TechCrunch.
But for many American companies, life is going well A growing challenge in India.