Public Procurement (Preference to Make in India) Order 2018 for Cyber Security Products

‘Digital India’ is one of the flagship programmes of the Government of India (GoI) with an aim to transform the country into a digitally empowered economy. Given the massive push that the government is giving to this programme, some radical changes have taken place across the country at both the public as well as at the government level in terms of digitization. However, it is also a reality that the growing digitization has increased vulnerability to data breaches and cyber security threats.

According to the Indian Computer Emergency Response Team (CERT-In), more than 22,000 Indian websites, including 114 government portals were hacked between April 2017 and January 2018, including the Aadhaar data leak in May 2017. These incidents clearly emphasized a strong need for cyber security products to tackle the threat to India’s digital landscape. In fact, last year, the Union Ministry of Electronics & Information Technology (MeitY) had directed all ministries to spend 10% of their IT budgets on cyber security and strengthen the Government’s IT structure in the wake of cyber threats.

Now, in order to be prepared for cyber breaches, the government entities need sophisticated security products and solutions. Currently, there is a heavy reliance on the foreign manufacturers to source these products as there are a handful of domestic players operating in this space. MeitY had issued a draft notification in June 2017 stating its preference to procure domestic cyber security products and give further impetus to the government’s flagship programme ‘Make in India’, thereby also boosting income and employment in the country.

The good news is that now the government has mandated ‘Public Procurement (Preference to Make in India) Order 2018 for Cyber Security Products’ policy which was released on July 2, 2018. With this policy in place, the local manufacturers will get the much required clarity and support to produce cyber security products. As the participation of domestic players increases in the cyber security industry, it will not only make the digital economy stronger and safer for the nation, but also enhance the ability of the suppliers to compete at a global business level. At the same time, it will also give an opportunity to foreign players to invest in the Indian cyber security product manufacturers which in turn will enable India to channel more FDI into the economy.

Let’s take a look at the key highlights of this policy are:

What is the objective?

Cyber Security being a strategic sector, preference shall be provided by all procuring entities to domestically manufactured/produced cyber security products to encourage ‘Make in India’ and to promote manufacturing and production of goods and services in India with a view to enhancing income and employment

Who are the procuring entities?

Ministry or department or attached or subordinate office of, or autonomous body controlled by the Government of India (GoI) which includes government companies.

Who qualifies to be a ‘local supplier’ of domestically manufactured/produced cyber security products?

A company incorporated and registered in India as governed by the applicable Act (Companies Act, LLP Act, Partnership Act etc.) or startup that meets the definition as prescribed by DIPP, Ministry of Commerce and Industry Government of India under the notification G.S.R. 364 (E) dated 11th April 2018 and recognized under Startup India initiative of DIPP.

 AND

Revenue from the product(s) in India and revenue from Intellectual Property (IP) licensing should accrue to the aforesaid company/startup in India.

How big is the government opportunity?

There is a huge government opportunity waiting to be leveraged, especially because MeitY had asked all ministries to spend 10% of their IT budgets on cyber security.

What are the key benefits of the policy to the local supplier?

The main benefits of the policy that local suppliers can avail are:

  • Procurement of goods from the local supplier if the order value is Rs.50 lacs or less.
  • For goods that are divisible in nature and the order value being more than Rs.50 lacs, procurement of full quantity of goods from the ‘local’ supplier if it is L1 (refer the note below). If not, at least 50% procurement from the local supplier subject to the local suppliers’ quoted price falling within the margin of purchase preference.
  • For goods that are not divisible in nature and the order value being more than Rs50 lacs, the procurement of the full quantity of goods from the local supplier if it is L1. If not, then the local supplier will be invited to match the L1 bid and the contract will be awarded to the local supplier on matching the L1 price.
  • The cyber security products notification shall also be applicable to the domestically manufactured/produced cyber security products covered in turnkey/system integration projects. In such cases the preference to domestically manufactured/produced cyber security products would be applicable only for the value of cyber security product forming part of the turnkey/ system-integration projects and not on the value of the whole project.

Note: L1 means the lowest tender or lowest bid or lowest quotation received in a tender, bidding process or other procurement solicitation as adjudged in the evaluation process as per the tender or other procurement solicitation.

How do I get my cyber security product listed to start getting the benefits of this policy?

You need to get your product evaluated and approved by the empowered committee of the government.

The ‘Public Procurement (Preference to Make in India) Order 2018 for Cyber Security Products’ policy is a commendable step in the direction of providing a robust leap to ‘Digital India’ and ‘Make in India’ programmes.

Get complete details about the policy here. You can also reach the author for more details @ [email protected]

About Author:

Ashish Tandon, Founder & CEO – Indusface

Ashish Tandon a first-generation entrepreneur with a rare combination of strong technology understanding and business expertise has successfully lead and exited several ventures in the areas of security, internet services and cloud based mobile and video communication solutions. Under his leadership as founder & CEO, Indusface a bootstrapped, fast growing and profitable company, has been recognized as an award-winning Application Security company with over 1000+ global customers and a multi-million $ ARR. He is also closely associated with the government and industry bodies of India in drafting of the various Software Product & Security related acts, regulations & policies. Connect with him on LinkedIn or Twitter.

Ease of Doing Business – Is India Game?

Conducting business in one’s own country is never easy, let alone conducting business overseas, where rules, regulations and business environments differ. ‘Ease of doing business’ is also an Index created by the World Bank. It ranks economies from high to low, with the former indicating easier, simpler and better conditions for business as compared to the latter, indicating difficulty in conducting business. This article aims at giving you a glimpse into the world of investing in and conducting a business in India.

Economies are ranked based on parameters such as starting a business, dealing with construction permits, availability of electricity, registering property, availing credit, protection of minority investors, paying taxes, international trading, distance to frontier, entrepreneurship, good practices, transparency in business regulation, resolving insolvency and enforcing contracts. For any business, it is important to acknowledge these factors, or at least those that apply, as they decide how easy or difficult it is to conduct or start the business in a country.

For the year 2016 by World Bank’s records- India moved up from 134th to 130th rank in the Ease of doing business Index. Among the parameters mentioned earlier, India has best ranked in the protection of minority shareholders. It has also bettered its rank in the availability of electricity, getting construction permits and starting a business. On the downside, paying taxes and accessing credit have been the most difficult for business. Additionally, two key parameters that India needs to work on are enforcing contracts and resolving insolvency, that have both been a hindrance in conducting business.

To give you an idea of how few other countries fare in the rankings; Singapore, New Zealand and Denmark occupy the first three spots in the world, whereas Eritrea, Central African Republic and Libya occupy the last three spots.

The Indian Government has taken several initiatives towards increasing the ease of doing business, here are some that deserve a mention:

Ease of Doing Business.png

Registration

  • The availability of www.ebiz.gov.in, a Government portal where services are provided such as employee registration, name availability, Director Identification Number, PAN, Certificate of Incorporation, TAN, RBI (Foreign Remittances), EPF, Importer-exporter code, Foreign currency – transfer of shares, etc. Making registering and running a business much easier than before.

  • Now Aadhaar eKYC and eSign are being used to grant Digital Certificates to directors (DSC) of the company. This process is now made paperless and takes only a few minutes.

  • The requirements for minimum paid-up capital and common seal for companies has been removed as per the Companies (Amendment) Act, 2015 and the process for starting a business is now streamlined.

  • The Indian Prime Minister has shown particular interest in building a positive entrepreneurial spirit. He launched MakeInIndia, a website helping young entrepreneurs set up, access information, and build a business of their own.

  • Employee Provident Fund Organisation (EPFO) and Employee State Insurance Corporation have online portals so that businesses have real-time registration, online application for clearances and payments be made through 56 partner banks.

  • An Investor Facilitation Cell has been introduced as a first in order to help investors and guide them through the course of their business.

Taxation

  • GST (Goods and Service Tax) will replace indirect-tax, to be implemented by 2017. That is the removal of several layers of multi-layered taxes and multiple tax rates into one uniform Goods and Service Tax. This will make India attractive to foreign Investors as well as boost India’s exports because of less regulatory and bureaucratic tangles.

Infrastructure

  • In cities like Delhi and Mumbai, online construction permits such as DPMS (Development Permissions Management Systems) are in the process of being launched. Since the permits are completely digitized, the biggest impact this will have is speeding up the process of getting a permit by 5-8 months. It will save one the trouble of meeting someone in person, which has a direct positive impact on reducing corruption, delayed work and human error to a large extent.

  • A business being affected by a cyber crime is every founder and investors’ nightmare. Training programmes for officers in the sensitization towards cyber crimes and related infringements is also a significant initiative taken by the Indian Government.

  • Special management teams have been set up to fast track and facilitate investments made to India from South Korea or Japan. The plans are coined ‘Japan Plus’ and ‘Korea Plus’.

Compliance

  • If your business deals with cross-border trading, you’re in luck. The Government has made the process highly efficient by reducing the time utilised at ports and airports. Necessary clearances for exporters and importers has also been prioritized. As a result of the improvements made, export and import clearance that once used to take nearly 5 and 11 days has reduced by more than half the time.

  • Minority shareholder’s Interests are well protected in India. Apart from ranking high on the ‘ease of doing business Index’, a greater disclosure is now required of the board members on matters of ‘conflict of interest’.

Legislations

  • A National Company Law tribunal and an appellate tribunal was set up to replace the existing Board for Industrial and Financial Reconstruction (BIFR) and Company Law Board (CLB). The National Company Law Tribunal was set up to resolve corporate disputes faster and efficiently, to examine existing laws that relate to winding up procedures and to suggest reforms regarding winding up and insolvency in an effort to match up to international standards and practice in this field.

  • The ease of doing Business in India is also about exiting a business efficiently as much as it is about starting and running one. Thankfully, the Government is soon to enact the ‘Bankruptcy Code’, which will make it easier for investors to exit a business in case of Insolvency.  At present, it takes 4 years to resolve an issue related to insolvency. With the new code, time taken to exit from a business will be reduced to a period of under a year.

Foreign companies that invest in Indian businesses have contributed heavily to India’s economic growth over the past years. The Government has set up FDI and FEMA measures to increase economic activity, set regulations and caps on sectors and generate employment opportunities.

Foreign Direct Investment (FDI)

Money that India receives from investors abroad is FDI. Foreign companies that invest in Indian businesses gain a monetary advantage in terms of labour wages and benefit from the high economic growth rate prevailing in India.

The Foreign Direct Investment allowed for an entity based in another country is:

Sector FDI Allowed
Direct route Indirect route
Insurance and Pension 49%
Defence 49% above 49%
DTH, Cable, sky broadcasting 100%
Brownfield Airport Projects 100%
Scheduled Air Transport Services 49% 49%-100%
Foreign Airline Companies 49% of paid up capital Upto 49%
Marketplace Model of e-commerce 100%
Food products manufactured/produced in India 100%
Asset Reconstruction Companies 100%
Brownfield Pharmaceuticals 74% above 74%
Private Security Agencies 74%
Non ‘News and Current Affairs’ linking channel 100%
Mining and Mineral separation of Titanium Upto 100%
Publishing/Periodicals/Journals Upto 100%
Publication of foreign newspapers Upto 100%
Publication of Indian versions of foreign magazines Upto 26%
Satellites Upto 100%
Telecom 49% 49%-100%
Banking Private Sector 50%-Upto 74%
Banking Public Sector Upto 20%
FM Radio Upto 49%
NBFC 100%
Commodity Exchange 49%

(Figures as of August 2016)
Source: http://www.makeinindia.com/eodb

The Foreign Exchange Management Act, 1999 (FEMA)

The Foreign Exchange Management Act, 1999, was set up with the aim of Increasing foreign exchange through increasing external trade and promoting foreign exchange markets in India. All Offences relating to Foreign exchange are considered Civil offences.

Some of the revisions in regulations of FEMA to promote the ease of doing business are:

  • Acquisition and transfer of fixed/immovable property – several conditions for which RBI approval is no longer required to buy immovable property outside India by a company registered in India.
  • Possession and Retention of Foreign currency – an individual can have up to a maximum of USD 2000 in foreign currency at any time. This applies in all cases other than if the individual is not  a permanent resident of India, he obtained the foreign currency while being resident outside India or if such currency was brought in compliance with the laws applicable.
  • Export and Import of Foreign Currency – the upper limit of notes an individual can take outside the country or bring into India is INR 25000 (currency notes or RBI notes).
  • Import of Foreign Exchange – foreign exchange sent to India has no upper limit except in the case of currency notes, traveler’s cheques and bank notes. The upper limit on these types is USD 10000.
  • Postal Order/Money Order – any person can buy foreign exchange from any Indian Post Office in the form of money order or postal order.
  • Declaration of exports – for businesses that are either engaged in exports or those that are set up in Special Economic Zones or Special Technological Parks need to declare their exports backed up with evidence.
  • Insurance – regulations that are stated for an individual resident in India that avails a general or a life insurance policy issued by an insurer outside India and vice-versa.

Routes to Invest in India

Automatic/ Direct Route – No permission from the Central Government required under this route.

Government Route – Applications that are considered by the Foreign Investment Promotion Board (FIPB) come under this route.

Who can Invest in India?

  1. An Individual – FCVI, Pension/PF, Financial Institutions

  2. A Company – Non-Resident Indians, Foreign Trusts, Wealth Fund

  3. Foreign Institutional Investors – Private Equity Funds, Partnership Firm, Proprietorship Firm

Note: Investors from Pakistan and Bangladesh can Invest only through the Government of India. Residents from Pakistan cannot invest in Defence, Atomic, Space and other select sectors of the economy.

How to Invest?

Foreign Investors can invest in India in the following ways:

  • Incorporating a company – Either a ‘Private limited’ or a ‘Public Limited’ Company.
  • Sole Proprietorship/Partnership – Under RBI approval.
  • Limited Liability Partnerships – Allowed under Government Route in sectors that have 100% FDI.
  • Other Structures – Not for Profit entities, etc. are subject to FCRA regulations.

The steps an Investor should follow before investing are:

  1. Identify Sector
  2. Obtain Central Government approval if required for that sector
  3. Transfer Funds through eligible financial instruments
  4. Meet the stipulated requirements of the RBI Act
  5. Registration and Document Filing (PAN, TIN)
  6. Find Ideal Space and obtain clearances, if any
  7. Obtain Licence(s) if required
  8. Finding staff, paying taxes, etc

Taxation

An individual – Is taxed on the net income earned based on the tax bracket

A company – 30% tax + surcharge + education cess. Profits withdrawn are Taxed

Branch Office or Permanent Establishment – 40% + surcharge + cess

Incentives provided by the Government

  • Special Economic Zones (SEZ), Export Oriented Units (EOU) and National Investment and Manufacturing Zones (NIMZ) offer incentives such as tax reduction and tax holidays for businesses set up in such zones. Manyata Tech Park and Eco-Space are examples of SEZ’s.
  • Incentives on exports such as duty remission/exemption scheme, market schemes, focus products, duty drawback, etc.  to increase exports.
  • Area based Incentives for operating in particular areas of India such as Uttarakhand, Assam, Jammu and Kashmir, etc.
  • Apart from these Incentives, each State Government has its own incentive policy.

It is safe to say that with the Governments several acts and initiatives to stimulate increased investment and growth, India has truly built favourable all-round business conditions. India emerged as the top destination for foreign direct investment (FDI) by capital investment in 2015, attracting $65 billion worth of investments, overtaking China and USA. Business in India? Absolutely.

Guest post by LegalDesk.com, a Do-It-Yourself legal platform for making legal documents online. LegalDesk.com helps startups with incorporation and legal documentation services. It also provides Aadhaar-based eSign service to businesses.

India Stack takes the Digital India campaign to a whole new level

India is the third largest smartphone and mobile internet user market in the world with over 200 million internet users in 2013. The figures are expected to touch a staggering 500 million users by 2017, including 314 million mobile internet users according to a report by IAMAI and KPMG. Clearly, mobile phones are the ‘computing device of choice’ for the country. To keep up the momentum, the Government of India is keen on developing the digital infrastructure of the country under the Digital India program.

Digital India is a revolutionary program that will empower the masses and leapfrog India into the next generation of government services. Fortunately, the lower level of investment in earlier generation technology means India has skipped the legacy era and waited for the right technology to arrive at its doorstep. To kick-start and empower the Digital India program in a very democratized form and involve the great innovation talent of the nation, the Government of India has launched an open API policy. An open API, often referred to as a public API, is a publicly available Application Programming Interface (API) that provides programmers with programmatic access to a propriety software application. This set of open API is known as the India Stack and these would enable the ease in integration of mobile applications with the data securely stored and provided by the government to authenticated Apps.

India Stack is a complete set of API for developers and includes the Aadhaar for Authentication (Aadhaar already covers over 940 million people and will quickly cover the population of the entire nation), e-KYC documents (safe deposit locker for issue, storage and use of documents), e-Sign (digital signature acceptable under the laws), unified payment interface (for financial transactions) and privacy-protected data sharing within the stack of API. Together, the India Stack enables Apps that could open up many opportunities in financial services, healthcare and education sectors of the Indian economy. What this essentially means is that developers and tech startups can now build software and create businesses around the readily available infrastructure offered through India Stack, thus opening a huge potential to tap into the booming smartphone market in the country. Since the consumer market in India is very large, such startups could also hope for institutional funding and gain from the early mover advantage.

Through the digitized elements like e-KYC, e-Sign, digitized Aadhaar information and digital locker, the entire ecosystem has now become a presence less, paperless and cashless based system. A Digital Locker enables users to have all their legal documents in a digitized format that is stored online and can be accessed from any part of the country. The e-Sign makes it simple for people to sign deals, contracts and legal documents through their phones and the Unified Payment Interface lets people make payments with ease through their smartphones from anywhere.

India Stack makes a user base of over a billion people readily available through its API. This means that startups and tech companies can build over this to be able to integrate various functions for their businesses or for larger enterprises. Every bank or telecom operator scans through tons of paperwork every day to be able to verify customers and generate KYC documents. Now imagine the impact if this entire process could be digitized by building an application which would integrate India Stack and the user base of over a billion Indians!

With the technology, documentation and sample code available, entrepreneurs and startups can get started with innovating, prototyping as well as building India Stack enabled applications. The commercial applications are endless with multiple opportunities, as the large user base opened up by India Stack is nascent, solution-hungry and largely untouched by technology. Now even a local vegetable trader can take an intra-day loan almost instantly through his mobile phone and pay it back the very same or next day without even physically visiting the bank or wasting any time (time is money when earnings are proportional to time spent)! With their e-KYC documents and digital signatures, a loan can be processed almost instantly and the money transferred through the Unified Payment Interface. Long queues at banks, telecom offices and all other government and non-governmental processes should be the thing of the past, through proper integration of India Stack.

The nation is looking for “a transition from technology-poor to innovation-rich society” and entrepreneurs have a good role to play. The problems (read opportunities) in financial services, healthcare and education are all so large that only the right technology can cost-effectively solve them. Solving these scale problems would mean great business sense too.

iSPIRT, the non-profit software product industry think tank powered by industry veterans, has been actively involved in the development of India Stack and is helping entrepreneurs make the best use of business opportunities provided by India Stack, while building their startups. iSPIRT believes that India Stack creates a whole new generation of business opportunities around the mobile phone and early movers would have tremendous market advantages.

On a recent visit to India, Bill Gates commented on India Stack saying, “India is on the cusp of leapfrogging!” And it truly is; considering it is the only country in the world offering such an open and secure API, India is certainly looking at taking the Digital India campaign to a whole new level.

The future is here and now is the time to act.

 

Announcing the Working Group on IT Security

siber640e_0With the growing penetration of technology, Internet, and digital medium, there is an increasing need for protecting critical infrastructure of the country. If compromised, these infrastructure can bring down the entire nation to stand still. With the nation going Digital India and the Prime Minister himself talking about security frequently, and challenging Indian citizens to create products that will server the nation and the world, we at iSPIRT are taking this
opportunity to create / develop / nurture the IT Security products, entrepreneurs involved in it, and product companies in the country.

We see a great opportunity for budding entrepreneurs to take this challenge and develop new products, small companies to find their niche and create a larger market for themselves, medium size companies to scale and become bigger, and large companies letting their employees to contribute in their individual / expert capacity. Keeping
iSPIRT’s vision in making India a Product Nation, we have created a Working Group on IT Security. We hope to get the support from all the relevant stakeholders. You can find more details about the program here.

Initiative Co-Hosted by Bikash Barai{iVIZ} & Ponnurangam Kumaraguru (PK) {IIIT-Delhi}

From manifesto to budget to delivery

The 2014 election manifesto of the Bharatiya Janata Party (BJP) outlined how innovation, research and technology can transform India into a superpower by empowering, connecting and binding all stakeholders.

The decisive mandate given to the BJP-led National Democratic Alliance, under the leadership of Narendra Modi, in the general election marked a paradigm shift in the Indian political landscape; the people of India reposed their complete faith in Prime Minister Modi and his team.

Finance minister Arun Jaitley and his team must be complimented for taking forward the visionary BJP manifesto and turning it into actionable budget proposals, and also for setting the direction towards building a “Digital India” where innovation, research and technology will play a major role.

Rural broadband and e-highways

A pan-India programme called “Digital India” has been proposed in the 2014 budget to bridge the divide between digital “haves” and “have-nots”. This would ensure broadband connectivity at the village level, improved access to services through information technology (IT)-enabled platforms, greater transparency in government processes, consumption of local content and a host of other services. The railway budget proposed providing Wi-Fi connectivity at train stations, on premium trains and “Office on Wheels”.

An ambitious plan to integrate all government departments through an e-platform will create a business- and investor-friendly ecosystem in India, by making all business- and investment-related clearances and compliances available on a single 24×7 portal, with an integrated payment gateway.

An ecosystem for innovation: from ‘Sell in India’ to ‘Made in India’

India, since the beginning of civilization, has been a leader in science and technology. Lack of a favourable ecosystem for spurring innovation, however, has dented its position post-independence.

Today, India produces only around 2% of IT products that it consumes. This is having an adverse impact on its economy. The need of the hour is to make India an innovation-driven manufacturing hub from a consumption market, by creating an enabling ecosystem for nurturing product start-ups. Entrepreneurship needs to become part of the national culture instead of being the success story of a few.

The new government has recognized the need to create an ecosystem for fundamental research and innovation for India to become a global manufacturing giant with specific programmes for small entrepreneurs, start-up villages and incubation centres. The nationwide district-level incubation and accelerator programme can promote frugal innovation ground-up.

Special focus on software product industry

IT services will remain important for economic growth, but India needs new growth drivers as well. Global Indians educated in Indian universities, in Indian Institutes of Technology and Indian Institutes of Management have used foreign soil to make inventions and innovations that have benefited the world.

With the right impetus, it is quite possible to create the next Google, Facebook, WhatsApp out of India. The budget makes a big start by launching a fund for promoting product-led start-ups, a much desired innovation in the thinking of the government.

E-Healthcare and e-Education

Much of real India, Bharat, still lives in villages. Unfortunately, the past government’s average spending on healthcare and education was just 1% and 3%, respectively, of gross domestic product. As a result, basic health and education infrastructure is in bad shape.

The budget does a great job in recognizing the enormous opportunity that lies in improving healthcare and basic education access by using IT. Use of telemedicine, virtual classrooms, open online courses and e-education can be the kick-starter to achieve size and scale to improve the primary healthcare network and basic education standards.

Content localization and digitization

India has more Internet users than English language speakers; as a result, regional language keyboards are vital for deeper Internet penetration. Local language content needs to get digitized. China has already successfully developed and standardized local language keyboards.

Government can help by providing the standard templates for every language that can then be commercialized by using the public-private partnership model.

Now it’s time to deliver.

Technology, needless to say, will play an important role in effective delivery of services, monitoring performance, managing projects and improving governance.

An Integrated Office of Innovation and Technology to achieve the same, and for problem solving, sharing applications and knowledge management will be the key to rapid results, given that most departments work in their own silos. Tracking and managing the projects assume significance because India has been busy spending money in buying technology that it has not used effectively or in some cases not even reached implementation stage. Sharing knowledge and best practices across departments need to be driven by this Office of Technology.

India needs interventions across sectors to become a global knowledge hub by 2022. The Prime Minister is a very technology-savvy leader and the country looks forward to his leadership to drive this next phase of revolution in innovation and technology with a renewed vision and vigour.

This article first appeared in LiveMint