In a letter published in November 2019, Sanjay Dhotre, India’s Minister of State for Electronics and Information Technology (MeitY) , stated that the Indian government is developing a National Level Blockchain Framework and is currently preparing an approach paper. The letter arose in response to a number of questions from MP Parvesh Sahib Singh Verma on what steps the government had taken to promote and encourage the use of blockchain technology and whether it had conducted research into the use of blockchain technology.

The National Level Blockchain Framework

Taking effect at state-level, the proposed framework is expected to establish ground rules on how India’s government can apply and use blockchain technology for improving the delivery of public services and solving governance issues. The approach paper will also consider the impact that distributed ledger technology can have and the need for a shared infrastructure across several industries and set out MeitY’s views on the “scaling up and wider deployment of blockchain use cases”.

India’s Promotion of Blockchain

India is looking to establish itself as leader in blockchain technology. For example, a blockchain system for land-registry is currently being tested in the Shamshabad District of Telangana State. The  State has also released a draft policy initiative on the use of blockchain, which is aimed at establishing an ecosystem for blockchain start-ups and research initiatives. At a corporate level, Indian companies have also engaged with blockchain projects; for example, Tata Consultancy Services has worked with R3’s blockchain Corda to create a multi-brand customer loyalty platform.

The letter identifies a number of initiatives that MeitY has taken to encourage the use of blockchain, such as the promotion of several proof of concepts as well as the development of a multi-institutional project, the “Distributed Centre of Excellence in Blockchain Technology”. This project aims to develop several blockchain related initiatives such as research and development in blockchain technologies, design, prototyping and piloting of blockchain based applications across a number of industries, analysis of challenges and capacity building.

However, whilst India’s government may be taking a pro-blockchain stance that is supportive of distributed ledger technology, it  has been less favourable towards the use of cryptocurrencies. Since April 2018, the Reserve Bank of India has prohibited banks and financial institutions from engaging with clients that offer cryptocurrency services. Furthermore, in July 2019, the Indian government proposed a bill which would ban cryptocurrencies and other digital currencies within India. This bill is wide reaching and targets people who mine, generate, hold, sell, transfer, dispose, issue or deal in cryptocurrencies either directly or indirectly and imposes criminal sanctions with risk of imprisonment for those found in breach. Whether MeitY’s and other Indian blockchain initiatives that are based on the distributed ledger aspect of the technology will persuade the government to move away from this hard-line approach towards cryptocurrencies, remains to be seen.

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Sue McLean is a partner in the IT/Commercial Practice Group in Baker McKenzie's London office. Sue advises clients on technology, sourcing and digital media business models and deals, as well as the legal issues relating to the implementation of new technologies. Sue advises clients (both customers and suppliers) on a wide range of technology matters including outsourcing, digital transformation, technology procurement, development and licensing, m/e-commerce, cloud computing, AI, FinTech, blockchain/DLT, social media, data privacy and cybersecurity. Sue also advises on commercial agreements and the commercial, technology and intellectual property aspects of M&A transactions and joint ventures. Sue has experience across various business sectors, including the financial services, consumer, TMT, travel and life sciences industries. She regularly speaks and writes about the impact of disruptive technologies and has a regular blog for Computerworld.

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Dan Relton is an Associate in the London office of Baker McKenzie.

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