India recently amended its Biological Diversity Act, 2002 (BD Act, 2002) by passing the Biological Diversity (Amendment) Act, 2023 after two years of consideration. India, being rich in biodiversity had introduced the BD Act, 2002, to fulfil its obligations under the United Nations Convention on Biological Diversity and the Nagoya Protocol on Access and Benefit Sharing. Its legislative intent was to ensure that the benefits derived from the use of Indian biological resources and associated traditional knowledge are shared in a fair and equitable manner among the indigenous and local communities.

The National Biodiversity Authority (NBA) is the central body administering the BD Act, supported by the State Biodiversity Boards (SBB) and the District level Biodiversity Management Committees (BMC). The provisions under the BD Act, 2002, required multi-stage permissions from the NBA to access resources for commercialisation, including for filing patent applications that disclose the use of Indian biological resources. The permissions were granted through agreements with the NBA on mutually agreed terms on access and benefit sharing (ABS) fees. Non-compliance with the provisions could attract penalties including fines, and even imprisonment.

Needless to say, there was widespread concern among the related research and industry sectors, particularly domestic players with regard to the prevailing law as it created several barriers to accessing Indian biological resources for purposes of research as well as commercialisation. Over the years, various stakeholder representations highlighted to the concerned ministry that the existing provisions negatively impacted both research and business. Particularly, changes were being sought to enable collaborative research and investments and to ease the requirement of obtaining NBA permissions before the grant of a patent application.

Stated objectives

The Biodiversity (Amendment) Bill, 2021, aimed to address these concerns by simplifying compliance requirements, stating the following objectives. The Bill further formed the basis of the Biological Diversity Act, 2023, (BD Act, 2023):

(i)    Encourage cultivation of medicinal plants;

(ii)   Encourage the Indian system of medicine;

(iii) Facilitate fast-tracking of research, the patent application process, and transfer of research results while utilising the biological resources available in India without compromising the objectives of the United Nations Convention on Biological Diversity and the Nagoya protocol;

(iv)  Decriminalise certain provisions related to imprisonment and instead introduce/increase fines for non-compliance; and

(v)   Encourage more foreign investments in biological resources, including in research, patent filings and commercial utilisation, without compromising national interest.

With this as background, the following key amendments in the BD Act, 2023, are of particular importance:

1.      Decriminalisation: The amendments to section 55 of the Act have removed the provision on imprisonment and instead, increased the quantum of fines (5 to 10 times compared to the earlier Act).

2.      Exemption from seeking NBA permission for Indian entities: under the earlier Act i.e. BD Act,2002, any Indian entity with mere non-Indian participation in its share capital or management, would be required to seek permission to access Indian biological resources for research, commercial utilisation or knowledge associated thereto. Amended section 3(2) has harmonised the definition of a non-Indian entity with the Indian Companies Act[1]. As a result, only those Indian entities which are directly controlled by a foreign entity will now need such permissions.

3.      Intellectual Property Rights (IPR): amendments to Section 6 clarify the process for obtaining an IP disclosing Indian biological resources and associated traditional knowledge. While non-Indian entities will still be required to seek prior approvals, Indian entities now only need to register such information with the NBA while filing an application for a patent (or any IP) and seek prior approval in case the patent is commercialised.

4.      Use of foreign bioresources: a new section 36A authorises the NBA to monitor and regulate the access and utilisation of biological resources obtained from foreign countries.

5.      Indians to pay ABS to SBBs: the powers of SBBs have been clarified and the amendment to section 7 now requires Indian entities to pay ABS to them.

6.      Expansion of NTAC exemption list: The list of biological resources Normally Traded as Commodities (NTAC) has been expanded to include derivatives of NTAC bioresources, agricultural wastes and cultivated medicinal plants and their products. The exemption is, however, restricted to Indian entities and applies to trading purposes only as was the case earlier.

While the Biological Diversity Amendment Act, 2023, is still new, and more clarity on its implementation will emerge as the NBA publishes the related regulations or guidelines, it has been welcomed as a positive step towards opening up access and utilisation of Indian biological resources for domestic players.

The Indian research and industry stakeholders are viewing it as a significant step towards encouraging science and innovation in the related sectors, and achieving the ambitious goal of a $300 bn bioeconomy set by the Indian government.

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[1]Clause (27) of Section 2 of the Companies Act, 2013- “Control” shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner.