The growth of the Indian economy has continued to be healthy despite a slowdown in the global economy. This is largely attributable to India’s resilient technology industry, which is well on its way to becoming a digital economy worth a trillion dollars. Health tech, fintech, ed-tech, and agri-tech are just a few emerging technologies and start-up industries that have seen rapid expansion in recent years.

We have also witnessed the rise of online gaming and OTT media platforms outside of these “tech” industries. Regulative systems struggle to keep up with the development of previously unknown industries and sectors.

When it comes to innovation, the struggle is common. The tech start-up ecosystem’s “move fast and break things” strategy is incompatible with governments’ slow and time-consuming law-making processes. Negative effects can result from a lack of regulations. It also exposes customers to unfair or deceptive practices and creates an environment of regulatory uncertainty for the industry. As the industry evolves faster than regulations, Industry self-regulation may be viewed as a viable alternative in these situations where regulation is necessary.

There are often several benefits to industry self-regulation when members of the industry collaborate to create a governance framework and agree to be governed by its terms. In many cases, industry players are more knowledgeable than government agencies about the technical aspects of their field. Because of this awareness, industry-developed regulations are frequently more nuanced and capable of addressing issues that individuals outside of the industry may not be aware of. Additionally, industry compliance with self-regulatory standards may be highly anticipated. Industry players are more likely to accept the self-regulatory code’s terms and not dispute them because they participated in the policy development process and signed it. Last but not least, one of the most significant advantages of a self-regulatory system is the development of an easy-to-use dispute-resolution procedure. When an independent regulatory authority can adjudicate complaints and grievances in a timely and efficient manner, parties seeking grievance redress will not have to go through the lengthy process of litigation.

A good example of industry self-regulation can be seen in the context of the online gaming sector. While Indian courts have recognized the distinction between games of skill and games of chance, with the former being a constitutionally protected business activity, the law has been lagging in recognizing this distinction. To fill this regulatory gap, the All India Gaming Federation (AIGF) has set up a self-regulatory ecosystem that consists of the Skill Games Charter, the Skill Games Council and the AIGF Ombudsman. The self-regulatory mechanism and responsibilities that AIGF industry members must adhere to are outlined in the Skill Games Charter. The autonomous Skill Games Council which was set up under the Skill Games Charter is headed by former Supreme Court Justice Vikramajit Sen and is an independent approval and certification mechanism for games of skill. A minimum of three council members, including a legal expert, evaluate each application for approval, and the majority vote makes decisions. The AIGF Ombudsman was established as a redressal mechanism for displeased users in addition to the grievance redressal mechanisms that were established at the level of individual AIGF member organizations. It should come as no surprise that other gaming associations and emerging technologies are currently utilizing models that are comparable to this type of self-regulatory organization (SRO). This is because of the comprehensive and robust nature of this type of SRO.

Industry self-regulation may have several advantages, but such mechanisms cannot exist in isolation. Since SROs would only be able to impose penalties for non-compliance, explicit government recognition of their role and responsibilities would significantly increase their legitimacy and strength. Strong SROs with a clear mandate from the government can support the growth of emerging industries while also ensuring that these industries uphold high ethical and professional standards.

Credit: The Times of India