India is known to the world for its diversified biological resources. Arising out of its obligations as a signatory to the United Nations Convention on Biological Diversity held at Rio de Janerio in 1992, and "to provide for conservation of Biological Diversity, sustainable use of its components and fair and equitable sharing of benefits arising out of the use of biological resources and knowledge", the Biological Diversity Act, 2002 (BD Act) was enacted by India to regulate access to, and use of, its biological resources.
In essence, the BD Act mandates approvals from the National Biodiversity Authority (NBA) and to inform State Biodiversity Authorities (SBAs) for people to access and use biological resources, or knowledge associated thereto, for research purposes, commercial utilisation, bio-survey and bio-utilisation, for applying intellectual property or for transferring results of research.
The scope of the BD Act extends to "biological resources" occurring in and obtained from India and knowledge associated thereto. Section 2 (c) of the BD Act defines "biological resources" as plants, animals and micro-organisations or parts thereof, their genetic material and by-products (excluding value-added products) with actual or potential use or value but not including human genetic material.
The BD Act requires that a person/entity obtain prior approval from the NBA to:
- Access biological resources or traditional knowledge associated with it for the purposes of research, bio-survey, bio-utilisation or commercial utilization.
- Make any application for any intellectual property rights.
- Transfer any results of research.
It also stipulates that certain persons or entities are required to inform respective SBAs for obtaining certain biological resources occurring in and obtained from India for the purpose of commercial utilisation or bio-survey and bio-utilisation.
Approvals under the BD Act
In terms of Section 3 of the BD Act, any person who is (i) a non-citizen or (ii) a citizen but non-resident or (iii) a body corporate in India having non-Indian participation (i.e., shareholding from entities/ individuals who are non-citizens, or is a non-resident, or is a body corporate not incorporated or registered in India), is required to obtain prior approval from the NBA for accessing any biological resources occurring in India or knowledge associated thereto for the purpose of research or for commercial utilisation or for bio-survey and bio-utilisation.
In terms of Section 4 of the BD Act, a person is prohibited from transferring the result of research to any person who is: (i) a non-citizen; (ii) a non-resident;(iii) a body corporate or organisation that is not registered in India or incorporated in India; or (iv) has any non-Indian participation in its share capital or management without prior approval of the NBA.
In terms of Section 6 of the BD Act, a person is prohibited from making an application for any intellectual property in or outside India for any invention based on any research or information on a biological resource obtained from India, without obtaining prior approval from the NBA.
Further, in terms of Section 7 of the BD Act, any person who is (i) a citizen of India or (ii) a body corporate or organisation registered in India without any non-Indian participation is required to inform the SBA prior to accessing biological resources in India for the purpose of commercial utilisation, or bio-survey and bio-utilisation for commercial purposes.
Exemptions under the BD Act
The BD Act stipulates that Central Government may in consultation with the NBA by notification in the official gazette, exempt certain biological resources that are traded as commodities from the purview of the Act. In April 2016, the Central Government exempted 385 biological resources from the BD Act1. Further in 20172, the Central Government exempted an additional 36 biological resources. However, in terms of the note3 provided in the exemption notification, such exemption was made to facilitate trade of items which are normally traded as commodities. An interesting point is that exempted biological resources are from plant categories only.
Closing/withdrawal of applications
It is interesting to note that an application under the BD Act does not close merely upon the applicant's unilateral withdrawal. Since the subject matter is sensitive in terms of the scope, applicability and intent of the legislation, the BD Act provides for a detailed procedure for closing an application. In normal course, for any application, the NBA may seek a response from the applicant to get clarity. If the applicant does not respond to the queries raised by the NBA in a stipulated and reasonable span of time, the NBA may close the application. The fairness of the BD Act is evident from the fact that even though an applicant may not have responded to the NBA's questions, such applicant will again be given a chance to state his case before the application is closed.
However, if the applicant wishes to withdraw any application made before the NBA, then the applicant may make an unconditional request to the NBA. Such a request is checked by the NBA internally and only when the NBA deems that there is no adverse implication on withdrawal, such application is closed. All requests for closure of an application are examined and deliberated upon by the expert committee4, who after discussion and deliberation may: (i) recommend closure of the application; (ii) seek additional reasons for the applicant's withdrawal and re-examine them; (iii) recommend an enquiry by designated persons or through the SBA or any relevant agency in case of non-response or on suspicion of misappropriation / violation of provisions of the BD Act; or (iv) recommend any other action. Based on the recommendations of the expert committee, the NBA may consider closure of the application.
Once the application is closed after completion of all formalities, a closure/termination letter is sent to the applicant and a copy of the same is marked to the respective SBA or any other relevant agencies. It is also communicated to the respective attorney of the applicant /legal counsel as well. This procedure completes the process of closure and once an application has been closed / terminated, the applicant cannot reopen the same application but can apply afresh by paying the prescribed fee and fulfilling the necessary requirements as provided in the BD Act.
Post-facto approval or regularisation under the BD Act
The BD Act does not provide any scope for regularisation or compounding or post-facto approval of past violations relating to access to biological resources for commercial utilisation or for bio-survey and bio-utilisation. In this context, it becomes difficult for any organisation to make an application for approval, as there is fear of prosecution. This may be on account of lack of sensitisation by the authorities as to the manner of interpretation of the BD Act by the authorities.
As per the BD Act, accessing Indian biological resources without the prior approval of the NBA, could render the officers in charge of a company, as well as the company, liable for punishment by way of imprisonment of up to five years and/ or a fine of up to Rs. 10,00,000 (Rupees Ten Lacs). Also, accessing Indian biological resources without first informing the SBA, could render the officers in charge of the company, as well as the company, liable for punishment by imprisonment of up to three years or a penalty of up to Rs. 5,00,000 (Rupees Five Lacs) or both. Since there are civil and criminal penalties involved, companies / individuals would be circumspect while making any application for post-facto approval. It is obvious from the number of applications received by the authority every year that non-compliance in regard to the BD Act and Rules is very high, considering the fact that majority of the companies rely upon Indian biological resources for producing their goods or providing their services.
Currently, the BD Act does not allow post-facto approval or regularisation of past violations regarding access to biological resources for commercial utilisation or for bio-survey and bio-utilisation.
Owing to lack of clarity in the interpretation of certain definitions such as "biological resources", "commercial utilisation" or "value added products", lack of clarity in application procedure, lack of awareness on enforcement of the BD Act and fear of prosecution, companies or organisations have not strictly adhered to the compliances under the BD Act. It was brought to the notice of the Ministry that certain entities/companies are desirous of complying with the provisions of the BD Act, but, of late, authorities have been sending show cause notices for non-compliances under the BD Act.
To facilitate and enhance implementation of the BD Act, and to meet public interest in fulfilling its objectives, the Central Government has exercised its powers under Section 48 of the BD Act and issued an memorandum bearing number F.N.C-12025/8/15-CS-III on September 10, 2018 ("Office Memorandum 2018"). Salient features of the Office Memorandum 2018 are as follows:
- An application for approval can be made by the person/entity for the acts occurred in the past (i.e. July 1, 2004 onwards), where prior approval was required to be obtained but not obtained by the person/entity.
- The application made under the Office Memorandum 2018 shall be reviewed on merit and an approval shall be provided for those cases that would otherwise have been approved if the application had been made in time.
- All applications for approval for the past 15 years, i.e. since July 01, 2004 to date, would be considered by the authority for approval during such period.
- The authority is provided with a window of 100 days from the date of issuance of the Office Memorandum 2018 to review and provide approval. The last date for such a window was December 18, 2018.
Further, in the public interest of meeting the objectives of the BD Act, the Central Government by exercising its powers under Section 48 of the BD Act has issued an additional memorandum bearing number F.N.C-12027/6/19-CS-III on March 18, 2019 ("Office Memorandum 2019") extending the compliance date up to 60 days from date of issuance of the Office Memorandum 2019 – i.e. May 17, 2019.
The Office Memorandum 2018 and the Office Memorandum 2019 provide an opportunity for all entities/organisations that failed to adhere to compliances under the BD Act to comply with the requirements. As a matter of fact, to date, only 3,526 applications have been received by the NBA for approval and only 1,060 applications have been accorded with approval.
On the basis of information available in the public domain, it is important to note that the NBA and SBAs are currently sending legal notices to companies seeking explanation as to why any punitive action should not be carried out against them. Considering the stringent penalty and prosecution provisions in the BD Act, it would be interesting to see how the entities have used this opportunity to comply with the BD Act. Though it is unclear as to how many applications have been received under these memorandums, given two opportunities for compliance, it is likely that the authorities will gear up for compliances under the BD Act. It will be interesting to wait and see the authority's next steps in ensuing smooth compliance of the regulatory provisions under the BD Act.
3. Note No. 1, Page 36 of the S.O. 1352(E). The note provided in the exemption essentially clarifies that compliances under the BD Act are exempted, so far as the biological resources are normally traded as commodities. For all other purposes including research, commercial utiliszation, bio-survey or bio-utiliszation of such biological resources, the relevant provisions of the BD Act would be applicable.
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