The Viewpoint: The Biological Diversity (Amendment) Bill 2021- Implications for Indian entities

The proposed amendment to the Biological Diversity Act, 2002 (Act) by way of the recent Bill introduced in the Lok Sabha on December 16, 2021, was undertaken pursuant to long-standing concerns raised by the sector of Indian system of medicine, seed sector, amongst others. The concerns pertained to simplifying, streamlining and reducing compliance burden to encourage a conducive environment for collaborative research and investments. There was an increasing demand to simplify patent application process, clarify the scope of levying access and benefit sharing obligations and to decriminalize the contravention related provisions.

One of the major amendments proposed in the Bill, by way of the amendment to section 3(2)(c)(ii), is to restrict the scope of entities that will be covered under the said provision and thereby enlarge the scope of entities covered under section 7. Under the current Act, two distinct categories of the applicants have been carved out.

The first category refers to purely Indian person/entities and the other refers to foreign nationals or entities having any non-Indian participation in its share capital or management. Depending on the said categorization of the applicant, necessary approvals for the activities of research, bio-survey & bio-utilization and commercial utilization are required, sought either from the National Biodiversity Authority (NBA) or the concerned State Biodiversity Boards (SBBs). These approvals are granted in the form of agreements executed between the applicant and the NBA or SBB. In the agreements, the monetary benefit sharing component is mentioned under the access and benefit sharing (ABS) mechanism based on the ABS Regulations, 2014 framed pursuant to the Nagoya Protocol.

The Bill proposes to restrict entities under section 3(2)(c)(ii) to only those that are incorporated or registered in India under any law for the time being in force, which is a foreign controlled company. While there are concerns with the explanation provided for the term “foreign controlled company” and the lack of amendment to section 3(1) in the Bill, nevertheless, this amendment will result in many erstwhile section 3(2)(c)(ii) entities to now fall within the scope of section 7. Resultantly, post the amendment, section 7 entities will need to intimate the concerned SBB only when they collect, procure or possess any biological resource occurring in or obtained from India or associated traditional knowledge thereto, for commercial utilization.

Such entities will not require any approval for research or bio-survey of biological resources occurring in or obtained from India and importantly will not need to pay any monetary benefit sharing payment for such activities. Although not expressly so stated, but a reading of the current section 3(1) and the amendment to section 19(1) indicates that even Section 3(2) entities are no longer required to take approval from the NBA for research or bio-survey and thereby will also not be required to pay any monetary benefit sharing for such activities. This is because while section 3(1) states that 3(2) entities need prior approval from the NBA for obtaining any biological resource occurring in India or knowledge associated thereto for research or for commercial utilization or for bio-survey and bio-utilization, section 19(1) as proposed to be amended in the Bill, only provides for approval for commercial utilization. It remains to be seen whether Section 3(2) entities will need to register with the NBA for access of Indian Biological resources for research or bio-survey.

Despite the amendments in the Bill, the uncertainty as to whether section 7 entities only need to ‘intimate’ the concerned SBB or need to obtain an approval from the SBB, continues. This is because while section 7 uses the term ‘intimate’, the amendment to section 23(b) provides that the function of the SBB include regulating section 7 activity by granting or rejecting approvals. Further, amendment to section 24(1) provides that prior intimation to the SBB will be in such form as may be prescribed by the State Government, whereas amendment to section 24(4) states that the SBB shall place in public domain the details of every approval granted or rejected under this section.

Thus, there is a need to harmonize these provisions to ensure consistency. In any case, a perusal of the respective SBB rules and the forms indicate that the term ‘intimation’ under section 7 is being implemented as an ‘approval’ by the SBBs. Accordingly, section 7 entities will need the approval of the concerned SBB in case they indulge in commercial utilization of biological resource occurring in or obtained from India or associated traditional knowledge thereto and will also have to pay the monetary benefit sharing payment as may be imposed by the SBB.

In relation to the approvals by the SBBs and the monetary benefit sharing payment imposed by them as part of the approvals, a writ petition was filed before the Uttarakhand High Court (UK HC) challenging, amongst others, the power of SBBs to impose "Fair and Equitable Benefit Sharing" (FEBS) because the current section 7, read with sections 23 and 24 do not grant power to the SBBs to impose any FEBS, monetary or otherwise upon section 7 entities. This is reinforced by the definition of FEBS under section 2(g) which states that benefit sharing is only that which is determined by the NBA under section 21. Regulations 2, 3 and 4 of the ABS Regulations 2014 were also challenged as being ultra vires the Act to the extent they empower the SBBs to claim benefit sharing from section 7 entities for accessing biological resources for commercial utilization.

The UK HC (SJ) dismissed the writ petition despite observing that on a plain reading of the provisions, the SBBs do not have the power to impose FEBS on Indians, by adopting a purposive interpretation of the Act and by placing reliance on international treaties and conventions to which India is a party and which have been recognised in the preamble of the Act. An appeal is currently pending adjudication before the Division Bench (Two-Judge) of the UK HC. Given this background, the introduction of section 23(ba) in the Bill is important. This provision states that the functions of the SBB include determining FEBS as provided under the regulations made by NBA, while granting approvals. The amendment to section 32 pertaining to the State Biodiversity Fund, further reaffirms this. The said provision under section 32(c) states that the State Biodiversity Fund will also include all sums including charges and benefit sharing amount received by the State Biodiversity Board and from such other sources as may be decided by the State Government. Although there is no amendment to the definition of FEBS under section 2(g) in the Bill, it appears that these amendments in the Bill are an attempt to remedy some of the lacunae pointed out in the writ filed before the UK HC.

Another key amendment to section 6(1A) & (1B) proposed in the Bill for the benefit of section 7 entities, is that such entities only need to register with the NBA before grant of any IP right in India or outside, for any invention based on any research or information on a biological resource which is accessed from India, including those deposited in repositories outside India, or associated traditional knowledge thereto. Such entities need to obtain an approval from the NBA only at the time of commercialisation of the IP right. This however is not the case for section 3(2) entities, who will be required to obtain prior approval of the NBA before grant of the IP right.

The amendment to section 6(3) in the Bill widens the scope of the exemption to plant varieties. The current provision states that section 6 shall not apply to any person making an application for any right under any law relating to protection of plant varieties enacted by Parliament. The Bill proposes to remove the words “enacted by the Parliament”. This means that the exemption under section 6(3) would also apply to cases where plant variety protection is sought outside India.

The Bill has also introduced an exemption in so far as section 7 persons or entities are concerned, such that the requirement under section 7 shall not apply to 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. It is to be noted that the exemption in so far as medicinal plants and its products are concerned, is only from approval for access and benefit sharing obligations by Indians, for commercial utilization of cultivated medicinal plants and not wild or non-cultivated medicinal plants. The Bill further provides that the manner of issuing certificate of origin for cultivated medicinal plants shall be such as may be prescribed by the Central Government.

Finally, the Bill has narrowed the scope of the exemption power of the Central Government under section 40, as per which the Central Government in consultation with the NBA, may by notification declare that the provisions of the Act shall not apply to any items, including biological resources normally traded as commodities. The Bill seeks to clarify the exemption and restrict its applicability only to section 7 entities and even for such entities the exemption will not be applicable where any IP is filed based on research or information on biological resources. The amendment proposes to clarify the exemption such that the Central Government in consultation with the NBA, may by notification declare that all or any of the provisions of the 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.

Recent reports indicate that the Bill has been referred to a Joint Parliamentary Committee which is likely to submit a report on the Bill by the 2022 budget session. It has also been reported that the draft Bill is likely to be open to public consultation. The proposed amendments and the discussions relating thereto is a positive development and will enable to clarify the scope of the Act, especially since the Courts have not had much opportunity to interpret the provisions of the Act.

The authors are Executive Director and Joint Partner respectively at Lakshmikumaran Sridharan