The QWERTY keyboard layout was designed to slow down typing to prevent mechanical jams. This design has persisted despite alternatives that could improve typing speeds. Path dependence like this is reflected in the legislative process in India, where outdated laws still govern modern technology. We need to break free from path dependence, especially in the context of enacting a new privacy law, to create regulations that are responsive to modern technology.
Lawmaking, fraught with the challenge of foreseeing unintended consequences, often leads to statutes filled with broad, catch-all provisions. These residuary clauses, while providing regulatory flexibility, create uncertainty and potential for overreach. The Other Service Providers (OSPs) regulations in telecom exemplify this, with vague definitions extending regulatory reach to unintended sectors. Precise, purpose-built legislation is advocated over open-ended definitions to avoid such regulatory ambiguities.
The Indian government’s approach to using imprecise language in law-making - particularly in technology regulation - can lead to unintended consequences. If we can use regulatory “sandboxes” to safely test new technologies to be tested within controlled environments it would foster innovation and create more precise and effective regulations.
Since the 2008 financial crisis, increased regulatory measures have led to higher compliance costs for financial institutions. Many banks’ legacy systems are struggling with these demands. Emerging RegTech start-ups are addressing this by using modern cloud-based technologies to simplify compliance. This field promises to transform regulation through efficient data processing, real-time API-driven compliance, and a shift from prescriptive legislation to principle-based algorithms.
While Press Note 3 of 2016, was supposed to liberalise FDI in e-commerce in India, it is filled with contradictory provisions and unclear definitions - particularly regarding the inclusion of service and digital product sales in e-commerce. It is, in fact, a step back and is reflective of the fact that the government’s understanding of technology and its impact is inadequate. Effective regulation in the Network Age requires precise, flexible legislation, understanding network patterns, and a non-linear approach to policy formulation.
