In collaboration with Corporate Law Group, New Delhi, India 

On December 16, 2021, India proposed amendments to the Biological Diversity Act, 2002 (the “BDA”) by introducing the Biological Diversity (Amendment) Bill, 2021 (the “Bill”).  The process to amend the BDA was undertaken in response to long-standing complaints by stakeholders in the Indian systems of medicine, seeds, and research sectors, as well as industry, that existing access and benefit-sharing (“ABS”) processes in relation to Indian biological resources are too burdensome.

The Bill has several objectives.  It seeks to attract foreign investment in Indian biological resources, to fast-track research, patent application processes, and transfer of research results, and to decriminalize non-compliance.  The Bill also seeks to further the conservation of biological resources in line with objectives of the Convention on Biological Diversity (“CBD”) and Nagoya Protocol to the CBD, to encourage cultivation of medicinal plants, and to support the Indian system of medicines.

The Bill’s proposed amendments are extensive and touch on many different aspects of ABS, but focus mainly on access and access procedures.  In this blog, we present the key proposed amendments, as well as next steps in the process for the adoption of the Bill.

The key proposed amendments we noted are:

Definitions

• New Definition of “Access”: “Access” to biological resources is not defined under the BDA. In the Bill, access is now defined as “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.”  This definition is associated with proposed amendments to the BDA to include “access” to Indian biological resources as one of the triggers for ABS obligations.  This definition also makes clear that access is interpreted very broadly.  The Bill does not, however, define traditional knowledge, which could give rise to new interpretation issues.
• “Bio-Utilization” No Longer Defined: Under the BDA, obtaining an Indian biological resource for bio-utilization creates ABS obligations. The Bill removes the concept of “bio-utilization” from the definition of “bio-survey and bio-utilisation” under the BDA, and redefines “bio-survey” as the “survey or collection of any taxa, varieties, genes, components and extracts of biological resource for any purpose.”  The references to “collection of any taxa” and “varieties” are new.  This definition could be broad enough to cover activities previously covered by bio-utilization.
• Amended Definition of “Biological Resources” and “Derivatives” Added: Indian “biological resources” are defined under the BDA as “plants, animals and micro-organisms or parts thereof, their genetic material and by-products (excluding value added products) with actual or potential use or value…” The Bill replaces “parts thereof, their genetic material” with “parts of their genetic material”, and also replaces the term “by-product” with “derivatives”. The Bill introduces a new definition of “derivatives” as “naturally occurring biochemical compound or metabolism of biological resources, even if it does not contain functional units of heredity”.  The Bill does not provide a definition of  “metabolism of biological resources”, which may result in interpretation issues.  Currently, the BDA does not provide a definition of  “by-product”, which over time led to different interpretations.  One issue is the differentiation of by-products from “value added products”, as only the latter are carved out from the definition of biological resources.  While the Bill now defines derivatives, it still does not amend the definition of “value added products” in the BDA, so ambiguity persists.

Covered Users and Carve-Outs

• New Reference to Foreign-Controlled Companies: In terms of users of Indian biological resources, the BDA creates a distinction between Indian persons (under Section 7) and foreign persons, including those incorporated or registered in India and having non-Indian participation in its share capital or management (under Section 3(2)(c)(ii)). The Bill replaces the wording in Section 3(2)(c)(ii) with the following wording: “incorporated or registered in Indian under any law for the time being in force, which is a foreign controlled company” (“FCC”).  Read together with the Companies Act of 2013, the Bill defines FCCs as foreign-controlled companies or bodies that are incorporated outside of India, but with a place of business in India and conducting business in India.
• Discretion for Central Government to Determine which BDA Provisions Apply to NTACs: Under the BDA, the Central Government may declare that the BDA does not apply to certain resources “normally-traded as commodities” (“NTACs”). Based on the Bill, it will now have the discretion to “pick and choose” which of the BDA provisions are not applicable to NTACs and/or items derived from NTACs.  However, the Bill states that no exemption can be made from prior approval or registration obligations for applications for Intellectual Property Rights in relation to NTACs or items derived from them.
• New Carve-Outs for Cultivated Medicinal Plants and for Indian AYUSH Practitioners: The BDA generally applies to cultivators of medicinal plants, de facto limiting the culture of endangered plants. The Bill now carves out cultivated medicinal plants and their products from the prior intimation obligation to the relevant State Biodiversity Board that is associated with commercial utilization of biological resources. Registered Indian AYUSH (Ayurveda, Yoga, Naturopathy, Unani, Siddha, and Homeopathy) practitioners who have been practicing indigenous medicine, including Indian systems of medicine, for “sustenance and livelihood” are also exempt from this obligation in relation to commercial utilization of all Indian biological resources.

Powers of the National Biodiversity Authority, Access Procedures, and Penalties for Non-Compliance

• More Powers for NBA: The Bill seeks to empower the National Biodiversity Authority (“NBA”) to make regulations with the approval of the Central Government to provide for access to biological resources and associated traditional knowledge, and for the determination of benefit-sharing. This power was previously vested exclusively in the Central Government.  The Bill also empowers the NBA to monitor and regulate access to and utilization of biological resources obtained from a foreign country, in order to meet the international obligations to which India has signed on to.  This is new, and would extend the scope of the BDA to biological resources obtained from a foreign country.
• Simplified Access Processes for Intellectual Property Rights: Whereas the BDA currently requires NBA approval or registration before applying for an Intellectual Property Right, the Bill seems to introduce a two-step process for Indian citizens and companies that are not foreign-controlled seeking to obtain such Right. These persons/companies “shall register” with the NBA before grant of the right, then “shall obtain approval” from the NBA once the Right is obtained, “at the time of commercialisation” of the invention.
• Decriminalization of Non-Compliance: Last but not least of key amendments, the Bill removes the provisions making non-compliance with access or benefit-sharing requirements a criminal offence. New provisions seek to sanction non-compliance through a civil fine system, in which the fine is determined by a Senior Officer of the Government Joint Secretary rank on a case-by-case basis.  As a general rule, the range for fines is between INR 1 lakh and INR 50 lakh (approximately $1,300 – $67,000 USD).  These provisions are associated with new inspection prerogatives for authorities and officers empowered by the Central Government.

The Bill was forwarded by the Indian government to a Joint Parliamentary Committee (“JPC”) on December 20, 2021.  The JPC is now engaged in the review of the content of the Bill and will provide recommendations in a report expected to be placed before the Parliament soon.  In the meantime, the JPC has met thrice, with the next meeting with the State Biodiversity Boards scheduled on February 8, 2022.

Lack of consultation of State and Local Governments and of the general public in the process to amend the BDA drew criticism when the Bill was introduced.  Various stakeholders have now also voiced their concerns that the Bill is not doing enough to protect biodiversity and will essentially grant foreign companies and other entities unfettered access to Indian biological resources and associated traditional knowledge.

We will continue to closely monitor developments.  Please do not hesitate to get in touch with any questions about the Indian access and benefit-sharing rules.