India Regulatory Brief: Regulations for Internet Applications Taking Shape, Government Moves to Shorten Environmental Clearance Process

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Telecom Authority Plans to Regulate Internet Applications

The Telecom Regulatory Authority of India (TRAI) has issued a consultation paper to help develop a regulatory framework for Internet-based calling and messaging applications. These internet-based applications, known as over-the-top (OTT) services, include Skype, Viber, WhatsApp, Snapchat and Instagram.

The consultation paper, called “Regulatory Framework for Over-the-top Services”, raises questions such as whether Internet based calling and messaging applications should be brought under a licensing regime, and if those service providers should pay for use of traditional providers’ networks.

Local observers have suggested that TRAI may be interested in protecting domestic telecom service providers. Internet-based applications are accessed through telecom services, which allow OTT service providers to compete with traditional telecom’s service offerings. Indian telecoms that offer fixed and mobile telephone networks have often complained about Internet-based services cutting into their Short Message Service (SMS) revenue.

Compulsory Requirement for Women Directors Effective April 1

As of April 1, all listed Indian companies must have at least one women serving as a director on their board to comply with the Companies Act, 2013. The act came into effect on April 1 last year, but companies were given one year transition period to comply with the new law. Under the Companies Act, the Securities and Exchange Board of India (SEBI), who first issued the guidelines, can prosecute companies that have not complied with the law. Media reports state that of the 1,456 listed companies that must comply with this law, approximately 200 have failed to meet the April 1 deadline.

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Government Moves to Shorten Environmental Clearance Process

The government will soon launch standardized guidelines for environmental impact studies of industrial and infrastructure projects. These proposed changes should reduce the time for environmental impact decisions from up to two years down to 30 days. The initiative will likely be well received by industrial and infrastructure companies; many projects in India have been stalled as a result of environmental clearance procedures. In addition, Ministry of Environment and Forests officials have stated that the ministry would like to introduce further reforms to make doing business easier.

New Municipal Bond Rules to Make Infrastructure Funding Easier

The government has approved new rules that will make it easier for local governments to obtain funding for infrastructure projects. Under the new rules issued by the Securities and Exchange Board of India (SEBI), a corporation or municipality can now issue revenue bonds that can be publicly traded. Previously, municipal bonds were not tradable and available only to institutional investors.

SEBI has also announced new disclosure standards to improve the transparency of these investments. In order to issue municipal bonds, a corporation or municipality will need to have an investment grade credit rating and must contribute at least 20 percent of the project cost. In addition, municipal bond issuers must not have defaulted on a security or a loan in the previous year. These two measures should help prevent municipal bodies with weak corporate governance from spoiling the initiative.


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