Legal & Industry Updates - March 2024
LEGAL & INDUSTRY UPDATES
The Ministry of Corporate Affairs (“MCA”) Raises Asset and Turnover Thresholds for Mergers and Acquisitions (“M&A”) Requiring the Competition Commission of India (“CCI”) Approval (source)
MCA, on 8th March, 2024, has notified increase in the asset and turnover thresholds for M&A of firms requiring CCI’s approval. As per the notification, the threshold value on the basis of wholesale price index and exchange rate of rupee has been increased by 150%, with the aim to promote ease of doing business. Further, two domestic companies pursuing M&A plans will now have to seek the CCI's clearance if their combined assets and annual turnover in India exceed INR 2,500 crore and INR 7,500 crore, respectively, as opposed to INR 2,000 crore and INR 6,000 crore earlier. Also, if the target of an acquisition has assets of less than INR 450 crore or annual turnover of under INR 1,250 crore, as opposed to INR 350 crore and INR 1,000 crore, earlier, the deal would be exempted from the CCI approval.
CCI Prescribes Monetary Penalty on Global Turnover of Companies Engaged in Anti-Competitive Conduct (source)
CCI, on 6th March, 2024 has notified the Competition Commission of India (Determination of Monetary Penalty) Guidelines 2024, with the objective to combat violations of competition law and anti-trust activities committed by multinational firms, by prescribing monetary penalty on the global turnover of such firms, in cases where relevant turnover cannot be determined. Under the new provision, the CCI can levy a penalty of up to 10% of a company’s global turnover for the abuse of dominant position. The notification aims at encouraging companies and individuals to opt for commitments and settlements in order to avoid paying exuberant amount as penalty and establish a free and fair competition in India.
Internet and Mobile Association of India (“IAMAI”) Constitutes Task Force to Tackle Abuse of Dominance by Big Technology (“Tech”) Companies (source)
IAMAI has formed a task force to specifically address the abuse of market dominance by big tech companies. It aims to focus at Google Play Billing System and Intellectual Property related matters by collaborating with various government officials and policymakers and working towards bettering the policy to benefit the startup ecosystem. This task force has been initiated due to various accusations regarding very high commissions being charged by Google, which further results in making operation unsustainable for many startup companies. Although, Google has reduced their fees from 30% being charged earlier, they still maintain that the fee needs to be charged for sustaining their own business.
The Law Commission of India Recommends New Law for Whistleblower Protection (source)
The Law Commission of India, on 5th March, 2024, has notified a report suggesting creation of a dedicated legislation to safeguard trade secrets, with exceptions pertaining to whistleblower protection, compulsory licensing and government use, and public interest. Additionally, the report also proposed a separate legislation to address economic espionage. It extensively discussed the importance of safeguarding whistleblowers and suggested that the proposed legislation on trade secrets should include a safe harbor clause, granting immunity to whistleblowers rather than merely providing a defense. Currently, India lacks a specific law for the protection of trade secrets and are safeguarded under the general laws governing contracts, common law, criminal law, and principles of breach of confidence and equity.
New Antitrust Law may Cover Big Tech Firms with 10% India Operations (source)
The Central Government (“CG”) is considering to bring big tech companies under the ambit of the proposed digital competition law provided they reach a threshold of serving 10% of their global user base or conducting business transactions in India. The primary objective is to address potential antitrust concerns involving significant digital intermediaries. The selection of digital entities covered by the new law will heavily consider their substantial business operations in India. Further, the framework of the law will primarily be ex-ante, as the existing Competition Act, 2002 already operates on an ex-post basis to address competition issues.
The Securities and Exchange Board of India (“SEBI”) Approves Relaxations for Foreign Portfolio Investors (“FPIs”) to Facilitate Ease of Doing Business (source)
SEBI on 15th March, 2024, approved a set of relaxations for FPIs, alternative investment funds and entities seeking to raise funds through initial share sales, with the primary object of facilitating the ease of doing business in the securities market. SEBI has also approved a uniform approach for verification of market rumours by entities that have listed their equities. Additional disclosure requirements for FPIs having more than 50% of their India equity assets under management in a single corporate group have also been exempted. Moreover, SEBI has decided to relax the timelines for disclosure of material changes by FPIs and has decided to eliminate the requirement for a 1% security deposit in public/rights issues of equity shares, as well as to allow for the extension of the offer closing date due to force majeure events.
The Supreme Court of India (“SC”): Courts Not Authorized to Re-write Contracts or Establish New Contracts Between the Parties (source)
The SC in its recent ruling, asserted that courts shall not be authorized to rewrite or establish new contracts between the parties to contract and they must adhere strictly to the terms and conditions agreed upon by the parties when adjudicating disputes. In the case in hand, the contract between a seller and buyer explicitly stipulated that the buyer would have the option to terminate the contract and claim a refund of the consideration paid if the seller failed to provide an ‘occupation certificate’ before expiration of the one-year grace period. Despite the seller’s failure to furnish an ‘occupation certificate’, the National Consumer Dispute Redressal Commission (“NCDRC”) rejected the buyer’s entitlement to terminate the contract and receive a refund of the consideration amount already paid. The SC set aside NCDRC ruling stating that it is not open for the courts to rewrite or make a new contract by giving a new interpretation to the contract.
Various Electronic-Commerce (“E-Comm”) Companies Actively Pioneering Recruitment of Women for Night Shifts (source)
Various renowned e-comm and delivery companies are actively recruiting women for night shifts to enhance diversity in their blue-collar workforce. Currently, women make up around 10% of the total workforce in e-comm companies, however, this figure is expected to climb higher in the future to about 25% in 2024, as per the estimates. Further, the companies are taking measures to make workplaces more favourable for women by introducing measures like comprehensive training programmes covering road safety, fire safety, self-defence, prevention of sexual harassment of women, gender sensitisation, and also providing safe transport, necessary physical infrastructure, night canteens, and constant monitoring through CCTVs.
Central Board of Indirect Taxes and Customs (“CBIC”) Issues Circulars Fostering Gender Inclusive Facilities and Encouraging Women Participation in International Trade (source)
CBIC, on 8th March, 2024, has issued circulars primarily dedicated to promoting a gender-inclusive trade environment, thereby empowering women to contribute significantly to the international trade and global economy. The circulars direct its field formations to ensure representation of women in meetings of various committees, establish dedicated help desks and processing mechanisms for women traders and support the upskilling of women logistics service providers, freight forwarders, and custom brokers by providing relevant training opportunities. It further aims to provide a safe and secure working environment for women, with gender-inclusive infrastructure such as creches, adequate lighting, panic buttons, and regular facility upgrades along with raising awareness through regular gender sensitization training sessions for all staff and stakeholders.
Minister of State for Electronics and Information Technology (“MoS IT”): CG’s Artificial Intelligence (“AI”) Advisory to Not Apply to Startups (source)
In response to concerns raised by AI startups about CG's requirement for permission before launching new AI models, deeming it as hindering innovation and lacking foresight, the MoS IT has clarified that CG’s advisory regarding large language models would only affect significant platforms and not startups. MoS IT asserted that the advisory is targeted at untested AI platforms from deploying on the Indian internet. Though the advisory is not legally binding, questions have also been raised on the legal basis i.e. under which law CG can issue guidelines to generative AI companies since India’s current technology laws do not directly cover large language models.
Testing and Certifications Centres Proposed for Electronic Startups and MSMEs (source)
A 16-member task force, established to enhance India's domestic electronics manufacturing capabilities and foster its evolution into a leading product nation, is poised to recommend the establishment of validation and certification centres for electronics products of startups and MSMEs in the electronics manufacturing sector. The proposed centres would provide critical testing and certification services to ensure these companies' products meet global standards. The centres would not only certify products but also provide detailed feedback to help these small businesses improve their designs and manufacturing processes to compete effectively in global markets, thereby boosting economic growth and job creation.
The Union Cabinet Approves Tata Group’s (“Tata”) INR 91,000 Crore Investment in Semiconductor Units (source)
The Tata, in collaboration with Taiwanese Powerchip Semiconductor Manufacturing Corporation, is on the verge of establishing INR 91,000 crore project in Gujarat's Dholera district. This initiative marks the realisation of India's ambition to establish its first commercial fabrication plant, with the objective to localise chip assembly and production, thereby aligning with global economic trends. This project is expected to generate 26,000 high-tech jobs and one lakh indirect employment opportunities, making a significant impact on the economy and redefining India's role in the global semiconductor industry. The semiconductor foundry will manufacture high-performance chips in various categories, contributing to the growth of downstream industries such as laptops and domestic electronic equipment.
The Union Cabinet Approves INR 75, 000 crore for Rooftop Solar Subsidy Scheme (source)
The Union Cabinet, on 13th February, 2024 has approved a rooftop solar scheme under the PM-Surya Ghar Muft Bijli Yojana, for an outlay of INR 75,021 crore with the objective to provide up to INR 78,000 subsidy for the installation of solar plants and 300 units of free power for one crore households. The goal is to deliver sustainable energy solutions to every home and enable the households to save electricity bills as well as earn additional income through the sale of surplus power to DISCOMs. The scheme can be availed by applying on an integrated. National Portal wherein the households would be allowed to select a suitable vendor for installing rooftop solar.
The Department of Pharmaceuticals (“DoP”) Announces Revamped Pharmaceuticals Technology Upgradation Assistance Scheme (“RPTUAS”) to Uplift Pharmaceutical Technology (source)
DoP, on 11th March, 2024, has approved the RPTUAS scheme with the primary objective to ensure manufacturing of good quality pharmaceutical products, thereby ensuring its alignment with global standards. The scheme which only covered Micro, Small and Medium Enterprises (“MSMEs”) earlier has now been extended to pharmaceutical units with a turnover of less than INR 500 crores. The revised guidelines aim to support the pharmaceutical industry's upgradation to the Revised Schedule M (Good Manufacturing Practices [“GMP”]) of the Drugs and Cosmetics Rule, 1945 and World Health Organization-GMP standards. It further enables the benefits to be combined with state government led programmes for maximized support, more accountability and better allocation of resources.
The Ministry of Finance (“MoF”) Contemplates Amendments to the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (“SARFAESI”) Act, 2002 and Debt Recovery Tribunal (“DRT”) Regulations (source)
The MoF has set up a panel to suggest amendments in SARFAESI Act, 2002 and Debt Recovery Laws, including grating legal sanctity to e-notices so that a short message service and e-mails sent by banks can be also considered as a legal notice which would further help in fast-tracking the recovery of debt. The aim is to make the debt recovery process less tedious and more effective as well as accommodate modern communication methods.
Disclaimer: The updates provided in this document is not a legal opinion and does not claim to capture all legal developments related to the subject matter stated herein. It is advisable to seek legal advice for accurate applicability, prior to relying on the updates for any legal matter.