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.
The Internet and modern technologies have reduced information asymmetry in markets. With the abundance of data available today, can technology can replace regulations, ensuring data symmetry and achieving “minimum governance?”
