Prior Permission of NBA for Accessing Biological Resource from India by Indian Public Ltd and Foreign Entities and Express Approval for COVID research

Prologue

The Biological Diversity Act, 2002, a law governing utilization of biological resources and associated benefit sharing has been in existence for a long time, but its awareness is still not prevalent.  The familiarity of this law has been mainly due to the need for obtaining a permission for applying of Intellectual Property Rights viz. patents. The requirement of obtaining an approval even before carrying out the research for obtaining biological resource from India by entities like Indian public limited companies having any non-Indian holding its share, is yet not very well-known among the Indian Industry, as well as foreign researchers and corporates resulting in inadvertent violation of provisions of the law. This paper mainly discusses provisions relating to the same and opportunity of an express approval for COVID-19 research.

India – The Mega-diversity

India is one of the world’s ‘mega diversity’ countries that accounts for 7-8% of all recorded species, including over 45,000 species of plants and 91,000 species of animals. It is ranked ninth in the world in terms of higher plant species, which makes it a rich reserve for obtaining biological resources for carrying out research to contribute to human well-being.  

Biological Diversity Act 2002

There are several laws for environment protection such as Indian forest Act 1927, Wildlife protection Act 1972, Environmental protection Act 1986 and others but none of them properly addressed all the dimensions of ecological and biodiversity protection. Therefore, a need was felt for a legislation to protect the same. India became a party to the United Nations Convention on Biological Diversity signed at Rio de Janeiro in 1992thatcame into force in 1993. This Convention reaffirms the sovereign rights of the States over their biological resources. The government of Indian drafted its own national biodiversity plan and enacted “Biological Diversity Act” in 2002.

Object of the Biological Diversity Act, 2002

The main objectives of the Act are conservation, sustainable use and equitable benefit sharing arising from utilization of the bio-resources. The Act also covers the protection of traditional knowledge and equitable sharing of benefits arising out of the use of such knowledge.

National Biodiversity Authority

The National Biodiversity Authority implements Biological Diversity Act (2002). It is a Statutory Body and performs facilitative, regulatory, and advisory functions. The National Biodiversity Authority is responsible for providing various approvals to respective entities for obtaining and utilizing biological resources and associated knowledge from Indian for research, commercial utilization, and obtaining of IPRs.

Definition of Biological Resource

As this Act regulates utilization of biological resources for various purposes it is necessary to know the definition of “biological resource” by this Act. Section 2(c) of this Act defines:

biological resources” means 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, but does not include human genetic material

As per the above definition, any plants or their parts, animals or their parts, or microorganisms, or by-products are considered as a biological resource. It is crucial to note though the definition explicitly excludes value added products, there is no clarity amongst stake holders as what exactly can be construed as value-added products. Section 2(p) of the Act defines the value added product as follows:

value added products” means products which may contain portions or extracts of plants and animals in unrecognizable and physically inseparable form.”.

In view of the above definition for long time it was the understanding that extracts derived from plants, animals of their parts are value added products. However, the National Biodiversity Authority seems to construe it differently and has been considering such extracts within the definition of biological resource.

Requirement of Obtaining a Prior Approval by Foreign Entities and Indian Entities Having Foreign Participation (in Shares or Management)

Section 3 of the Act governs the need of a permission from the National Biodiversity Authority for obtaining any biological resource occurring in India or associated knowledge before carrying out research or for commercial utilization or other activities like bio-survey and bio-utilization by entities defined under section 3(2) as:

(a) a person not a citizen of India;

(b)a non-resident Indian as per Section 2(30) of the Income-tax Act, 1961;

(c)a body corporate, association or organization-

  • not incorporated or registered in India; or
  • incorporated or registered in India which has any non-Indian participation in its share capital or management

The above clarifies that Indian public limited companies whose even a single share is held by a foreigner or any Indian company whose management includes any non-resident Indian or foreigner needs to obtain a permission from the National Biodiversity Authority before obtaining the biological resources for initiating research or in case of commercial utilization of biological resource from India. Similarly, foreign researchers or foreign enterprises need to obtain the prior permission before accessing Indian biological resources. A non-compliance would otherwise render such entities in contravention of the Act, which can result in a grave penalty as discussed in later part of this paper. It is also imperative to understand other provisions of this Act requiring the prior intimation to the State Biodiversity Board (SBB) for obtaining biological resource for commercial utilization by Indian or foreign entities.

Prior Intimation to the State Biodiversity Board to Obtain any Biological Resource for Commercial Utilization

Section 7 of the Act, requires that any entity whether any Indian person, India private limited or public limited companies or any foreign person or foreign company needs to give a prior intimation to the respective State Biodiversity Board (SBB) for obtaining biological resource from its territory for commercial utilization.

The above requirement however is not applicable to cultivators of the bioresources themselves or practitioners of indigenous medicines like vaids and hakims.

Application for Prior Permission for Research or Commercial Utilization

The application to the National Biodiversity Authority for seeking a prior permission to carry out research is to be made in the prescribed Form along with the requisite documents and official fee of INR. 10,000/-. Similarly, the intimation or application to the State Biodiversity Board (SBB) for commercial utilization is required to be made in the Form as prescribed by the concerned SBB from whose territory the biological resource is required to be obtained.

The National Biodiversity Authority or the SBB, as the case may be, on being satisfied with the contents and completeness of the application, furnishing of the requisite enclosures and addressing of the queries raised or clarifications sought by the NBA or the SBB, the respective authority enters into a benefit sharing agreement with the applicant which is in fact the grant of approval for access to biological resources for research or commercial utilization.

Hence, the applications as mentioned above needs to be made with the utmost care providing all the requisite details and enclosures. Any further clarification sought needs to be satisfied in time bound manner to avoid any delays and secure early approval.

“Access benefit sharing” (ABS) with the National Biodiversity Authority and “Fair and Equitable Benefit Sharing” (FEBS) with National Biodiversity Authority for commercial utilization

An upfront payment needs to be made to the National Biodiversity Authority for obtaining biological resources for research or bio-survey and bio utilization leading to commercial utilization. Such upfront payment can range from INR 1000 to 20000 for one-time collection of biological resource of one species up to 5 kg whether from natural habitat or cultivated source of institution or industrial effluent or waste. Further the amount charged would depend on the purpose of use for example for nutraceutical, pharmaceutical, chemical, cosmetic, luxury product or bioremediation, etc.

It is to be noted that the National Biodiversity Authority would impose the ABS fee and State Biodiversity Board can impose FEBS fee. Determination of benefit sharing will be based on various factors such as stages of research and development, potential market for the outcome of research, amount of investment already made for research and development, nature of technology applied, time-lines and milestones from initiation of research to development of the product, risks involved in commercialization of the product, and commercial utilization of the biological resource. The amount of benefit sharing remains the same whether the end product contains one or more biological resources.

Where the biological resources for commercial production of a product are sourced from the SBB, the amount of the benefits will be decided by the SBB concerned.

Penalties

Section 55 (1) of the Act defines the penalties for those who contravenes or attempts to contravene section3, and said persons will be punishable with imprisonment for a term which may extend to five years, or with fine or with both. The fine can extend to ten lakh rupees and where the damage caused exceeds ten lakh rupees the fine would commensurate with the damage caused,

Section 55 (2) defines penalties for those who contravenes or attempts to contravenesection7. According to the same said person would be punishable with imprisonment for a term extending to three years, or with fine which extending to five lakh rupees, or with both.

Thus, above mentioned very harsh penalties for the contravention of section 3 or 7 emphasizes criticality of obtaining permissions either prior to carrying out the research or for commercialization.

Express Approval for Carrying out research for COVID-19

Usually, the approval by the National Biodiversity Authority takes a lengthy period up to few months or even more than a year which can impede obtaining of the biological resource and initiate research. However, “Guidelines on Access to Biological Resources and Benefits Sharing Regulations”, provides that specific consideration may be given to cases where technologies/products are developed for controlling epidemics/diseases and for mitigating environmental pollution affecting human/ animal/plant health.

In view of the recent pandemic of COVID-19, research activities are underway throughout the world in chase for finding the vaccine, diagnostic kits, immunological and other products. To facilitate such public limited listed companied in India and foreign entities who would be in need to obtain biological resource for India to carry out research relating  to COVID-19, the National Biodiversity Authority has afforded opportunity to fast-track the application filed by such entities.

As per the notification dated 3rd April 2020 the National Biodiversity Authority has issued notification that “In order to Fastrack the process of obtaining approval for conducting research on biological resources occurring in India or knowledge associated thereto, as mandated under Section 3 of the Biological Diversity Act 2002, for the person/entity falling under Section 3(2) of the said Act it has been decided to process the applications received by National Biodiversity Authority, complete in all respects, within 5(five) working days

Therefore, it is essential that applications must be complete in all respect and such applications will be taken on fast track and the approval will be given with 5 working days so that whatever medicine or vaccination is required to cure COVID-19 is manufactured as soon as possible and that there is no delay.

For understating various other permissions required from the National BiodiversityAuthority please see our ADVISORY here

Author: Mita Sheikh – Associate Director at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at mita@iiprd.com.

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