10 FEBRUARY 2016
Adhering to basics and freedom
The Telecom Regulatory Authority of India (TRAI) has to be commended for batting unambiguously for net neutrality, the principle of non-discrimination that is vital for the Internet to remain an open platform. Its decision was made clear on Monday when it prohibited telecom providers from charging differential rates for data services. The regulator's stance is commendable for two other reasons as well. One, it had to face enormous pressures to tinker with the way the Internet is governed. And, two, net neutrality, with its numerous interpretations, is a complex concept. The latest ruling could no doubt set the tone for regulators across the globe, especially those of countries that have socio-economic features akin to India's. More important, it would ensure that generations of Indians are not forced to be satisfied with services that pretend to be the Internet itself, robbing them of the real benefits of the medium. TRAI's decision would bring relief and cheer to the millions of Indians as also some voluntary groups that admirably campaigned for months together for this result, worried as they were that the regulator would give up on net neutrality. The danger had seemed that real. In the last year or so, there have been more than a few attempts by the big players to offer Internet services that intrinsically seemed to violate this principle. The public debate on net neutrality began during late 2014 when India's top telecom carrier Bharti Airtel decided to charge users extra for the use of applications with which they can make free calls over the Internet.
But the most prominent and persistent among the companies has to be Facebook, which spent a lot of time in pitching its Free Basics initiative as an altruistic effort that would help millions of India's Internet have-nots. Its founder, Mark Zuckerberg, took a personal interest in the campaign. Facebook's global rebranding of its internet.org initiative as a platform open for all but adhering to Facebook's standards, which offered "free and basic services", was arguably the consequence of the debate over net neutrality in the country. The point about providing at least some access to millions of new users for free, who otherwise cannot afford it, must have been difficult for TRAI to ignore. And that is why it is important to recognise that a ‘no' to Free Basics does not imply a failure on the part of TRAI to recognise the importance of catering to the Internet have-nots. In fact, the regulator has noted that it is not against the provision of limited free data that allows a user to explore the Internet. Simply put, it finds this route palatable because the choice is with the user. This is also a route that Free Basics could explore in the immediate future in order to stay alive in India. The regulator's problem with a price-based differentiation has more to do with the fact that in a market such as India it would distort consumer choice and have consequences that wouldn't be understood easily. The ruling also suggests that while TRAI recognises the need for India to bridge the digital divide, it realises that compromising the basic ideals of the Internet is not the way to do it.
Time for pharma course correction
The Finance Ministry's decision to withdraw customs duty exemptions for 76 life-saving drugs will at once make them more expensive and impact patients who are already paying a high price for such medical treatment. It is important to keep in mind that a majority of Indians meet health care costs through out-of-pocket expenditure, and any increase is bound to adversely affect them. It is true that the customs duty waiver is an interim measure, and that the list has to be revised periodically. Certain drugs now removed from the list are either no longer used by patients or are being manufactured in India at a lower cost than the imported ones, and therefore should be removed from it anyway. However, it is not clear what "public interest" is served by removing certain essential medicines that are either not manufactured in India or whose demand currently exceeds local manufacturing capacity. While the government has been enthusiastic about withdrawing the exemption for 76 drugs, it has failed to include certain life-saving or essential drugs that have been launched recently and are under patent protection. This indicates that consultations have not been broad-based; this has to be corrected as the patient's interest should be the priority. Unlike in the case of other commodities where the consumer is the decision-maker, doctors' prescription preferences, sometimes based on partisan considerations, dictate whether a patient ends up buying imported drugs even when locally manufactured options are available at a lower price. It is for this reason that the withdrawal of 22 per cent customs duty exemption on imported drugs could have an impact on a patient's budget; imported active pharmaceutical ingredients (APIs) will also increase the cost of generics made locally.
Since the late 1990s, India has lost out to China in the API market. Active as well as enabling support from the government in various forms helped the Chinese industry flood the Indian market with cheap APIs. While the product patent regime that came into full force since 2005 and the flooding of the market with Chinese APIs may appear to be genuine reasons for giving the Indian industry cover to catch up, any protection cannot be long-lasting. The only way for the Indian drug industry to grow is by investing in research and development and in producing novel drugs that enjoy patent protection. India is the pharmacy of the South, but that dominance is restricted to generics. This has to change, and the government has to extend support in larger measure. As is the case in the U.S., many drugs that go on to become commercially profitable have their origins in academic and government institutions. Unfortunately, the recent decision to cut research funding will not help the industry. The earlier the government realises this and changes its priorities, the better it would be for the country.