India introduces amendments to biodiversity laws: What this means for business

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India introduces amendments to biodiversity laws: What this means for business

India introduces amendments to biodiversity laws: What this means for business

January 7, 2022

On December 16, 2021, India proposed amendments to the Biological Diversity Act of 2002 (the Act) by introducing the Biological Diversity (Amendment) Bill, 2021 (Bill). Among other things, the Act imposes an Access and Benefit Sharing (ABS) fee on companies that use biological resources in their operations. Companies – both Indian and MNCs, in the FMCG, cosmetics, life sciences, and agri-business sectors need to engage with the relevant Indian authorities to determine whether ABS fees apply to them and if so, what is the quantum of the fees. These fees are collected, jurisprudentially, towards the conservation of biodiversity, local communities and traditional knowledge. ABS is implemented at three-levels in India - the National Biodiversity Authority (NBA) at the national level, the State Biodiversity Boards (SBBs) at the state level and the Biodiversity Management Committees (BMCs) at the local level.

The Act is read with the Guidelines on Access to Biological Resources and Associated Knowledge and Benefit Sharing Regulations, 2014 (ABS Regulations) which provides for the procedure to be followed for determining the quantum of benefit sharing fees. The Government intended to replace the current ABS Regulations with a fresh set of procedures proposed to be brought forward through the draft ABS Regulations, 2019. This draft was released and opened for public consultations in 2019, however, the revised Regulations have not yet been released.

The proposed amendments to the Act are quite extensive and cover a wide array of issues, including major changes at the regulatory and administrative levels which would affect governance. This article, however, concentrates on those issues that have been gnawing at MNCs to see whether the amendments clarify, add to, or do nothing to address those concerns.

Sr No	Original provision	Amendment	Comment
1.	No previous definition	“access” means collecting, procuring or possessing any biological resource occurring in or obtained from India or associated traditional knowledge thereto, for the purposes of research or bio-survey or commercial utilisation;
2.	“benefit claimers” means the conservers of biological resources, their by-products, creators and holders of knowledge and information relating to the use of such biological resources, innovations and practices associated with such use and application.	“benefit claimers” means the conservers of biological resources, their by-products, creators or holders of associated traditional knowledge thereto (excluding codified traditional knowledge only for Indians) and information relating to the use of such biological resources, innovations and practices associated with such use and application	It must be noted that neither in India nor globally is there a universally accepted definition of “traditional knowledge, associated traditional knowledge or codified traditional knowledge”. These concepts are legally defined by a country’s national law. The amendments introduce new concepts without defining them.
3.	On what it entails to be a foreign company: (ii) incorporated or registered in India under any law for the time being in force which has any non-Indian participation in its share capital or management.	(ii) incorporated or registered in India under any law for the time being in force, which is a foreign controlled company. “foreign controlled company” means a foreign company within the meaning of clause (42) of section 2 of the Companies Act, 2013 which is under the control of a foreigner	The proposed amendment suggests that body corporates incorporated in India which are foreign controlled companies will need approval of the NBA to source Indian biological products. These foreign controlled companies or FCCs are defined as per the Companies Act, 2013 which define FCCs as companies incorporated outside India but with a presence in India. The proposed amendment is unclear on what FCCs are.
4.	On whether the Act applies to Indian MNCs: No person, who is a citizen of India or a body corporate, association or organisation which is registered in India, shall obtain any biological resource for commercial utilisation, or bio-survey and bio-utilisation for commercial utilisation except after giving prior intimation to the State Biodiversity Board concerned: Provided that the provisions of this section shall not apply to the local people and communities of the area, including growers and cultivators of biodiversity, and vaids and hakims, who have been practicing indigenous medicine.	(1) No person, other than the person covered under sub-section (2) of section 3, shall access any biological resource and its associated knowledge for commercial utilisation, without giving prior intimation to the concerned State Biodiversity Board, subject to the provisions of clause (b) of section 23 and sub-section (2) of section 24: Provided that the provisions of this section shall not apply to the codified traditional knowledge, cultivated medicinal plants and its products, local people and communities of the area, including growers and cultivators of biodiversity, vaids, hakims and registered AYUSH practitioners who have been practicing indigenous medicines, including Indian systems of medicine for sustenance and livelihood.	Despite there being a lot of confusion because of the words “prior intimation” rather than “prior approval”, the amendments have left the terms as is. AYUSH practitioners could include Indian MNCs who would be outside the purview of the law, if the amendments are accepted. Should that happen, funding of biodiversity conservation could fall only on foreign MNCs through the ABS system.
5.	A new exemption for cultivated medicinal plants has been added	The manner of issuing certificate of origin for cultivated medicinal plants shall be such as may be prescribed	The previous reading of the law was making cultivators of medicinal plants liable to pay ABS, which was obstructing new plantations of endangered plants as well. While the idea is a welcome change, determining what is cultivated and what isn’t seems to be determined by a certificate of origin. If details of how the certificate is to be obtained are not airtight, the amendment will grant massive discretionary power to authorities, particularly at local levels.
6.	On Normally Traded as Commodities Notwithstanding anything contained in this Act, the Central Government may, in consultation with the National Biodiversity Authority, by notification in the Official Gazette, declare that the provisions of this Act shall not apply to any items, including biological resources normally traded as commodities.	Notwithstanding anything contained in this Act, the Central Government may, in consultation with the National Biodiversity Authority, by notification in the Official Gazette, declare that all or any of the provisions of this Act shall not apply to biological resources when normally traded as commodities or to the items derived from them, including agricultural wastes, as notified and cultivated medicinal plants and their products for entities covered under section 7, registered as per the regulations made or as prescribed: Provided that no exemption shall be made for the activities referred to in sub-sections (1) and (2) of section 6	According to the amendment, the Government may by notification declare one or more of the provisions of the Act to not be applicable on the NTACs. This means that it is the discretion and prerogative of the Government of India to ‘pick and choose’ which provision may or may not apply to NTACs. There could be a fair amount of confusion for MNCs adding to the existing ones. Additionally, the Bill proposes that activities under section 6 of the Act, i.e., seeking permission for grant of IPRs will now be applicable to NTACs as well. This was earlier exempt for NTACs.

Additional issues:

New Compliances with respect to patents

The Bill has also introduced a new step in the approval process with respect to grant of Intellectual Property Rights (IPRs). It states that entities which are applying for IPRs in relation to Biological Resources must obtain permission from the NBA prior to obtaining the IPR as well as at the time of commercialization of the IPR. This provision only applies to FCCs (section 7 companies) in the amendment.

Ambiguity regarding Value Added Products prevail

The Act exempts VAPs from ABS application. However, the definition of VAP has been disputed between regulators and the industry for several years. The Bill has not addressed VAPs separately at all.

Amendments do not address exemptions under NTACs

Another deadlock between regulators and industry has been on the nature of exemption granted to NTACs – whether the commodity needs to be traded in the same form for the exemption to apply, or whether there is a blanket exemption on the plant part which is on the NTAC list. The amendments do not address this ambiguity.

Dentons Rodyk thanks and acknowledges Animesh Khandelwal for his contributions to this article.

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India introduces amendments to biodiversity laws: What this means for business

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