On August 3, 2023, amid objections from opposition leaders, activists, stakeholders, and the Ministry of Tribal Affairs, the Biological Diversity (Amendment) Act, 2023, received the President’s assent. Among the amendments to the principal Act of 2002 was the exemption granted to “AYUSH practitioners and traditional knowledge holders” from paying Access and Benefit Sharing (ABS), a compensatory amount paid to tribal and other communities who traditionally gather, protect, and use herbs and medicinal plants that are also important for the AYUSH industry.
AYUSH industry associations—Ayurvedic Drug Manufacturers Association, Ayurvedic Medicine Manufacturers Organisation of India, Association for Manufacturers of Ayurvedic Medicines, and AYUSH Manufacturers Welfare Association—had submitted to the Expert Committee set up by the Environment Ministry that Indian entities are not liable to pay ABS and that State Biodiversity Boards (SBBs) are not entitled to collect it. AYUSH is an acronym for “Ayurveda, Yoga & Naturopathy, Unani, Siddha & Sowa Rigpa, and Homoeopathy”, and manufacturers who sell such medicines or treatments are clubbed under the AYUSH industry.
The exemption, in effect, means giving the AYUSH industry a free pass, explained M.K. Ramesh, professor of law at the National Law School of India University, Bengaluru, and former law expert at the National Biodiversity Authority. It also removes the regulatory checks that ensure the sustenance of tribal and other forest-dwelling communities who are involved in the conservation of resources.
The amendment can be seen as a direct attempt to dilute a landmark 2018 judgment of the Uttarakhand High Court. On December 21, 2018, the High Court held Baba Ramdev’s ayurvedic manufacturing company, Divya Pharmacies, accountable for the non-payment of ABS and for the failure to obtain the consent of the Uttarakhand State Biodiversity Board.
Just two weeks later, on January 7, 2019, the then Environment Minister, Harsh Vardhan, held a meeting with the then Minister of State (Independent Charge) for the AYUSH Ministry, Shripad Naik, and AYUSH industry representatives. The meeting was about the constitution of the expert committee to identify issues in the Biological Diversity Act and Rules that may require changes, and an RTI inquiry revealed that Vardhan issued directions that the AYUSH industry may be exempted from paying ABS.
At the meeting, the AYUSH industry also expressed displeasure against the SBBs, which are the State-level authorities that oversee the implementation of the Biological Diversity Act, 2002, reportedly complaining of “harassment”. Industry associations also claimed, rather inexplicably, that the 2018 Uttarakhand High Court judgment was “silent on ABS”, and demanded that ABS be “kept in abeyance across India for the AYUSH industry”. However, as Ramesh pointed out, the 2018 judgment does deal extensively with various aspects of ABS.
A review of internal documents, accessed by this writer through the Right to Information Act, 2005, reveals that the Ministry of Tribal Affairs and the government’s own experts were against granting such an exemption to the AYUSH industry. The names of the industry representatives who attended the meeting were not revealed in the response to the RTI query. Both in the initial response and in the subsequent first appeal with the Information Commissioner, this writer was informed that the minutes of the meeting were never prepared.
While the non-payment of ABS will effectively take money away from the tribal communities who ensure the conservation of bio-resources, it also means that in the name of “ease of doing business”, multi-crore conglomerates are excused from paying a small share of their profits towards preserving the resources they exploit and towards the tribal populations whose knowledge they use.
Big business interests
Since 2014, the AYUSH industry has been growing at a compound annual growth rate of 17 per cent. In November 2022, AYUSH Minister Sarbananda Sonowal claimed that the industry would have a $23 billion market by 2023 and that “many initiatives” were being taken to achieve that objective.
The mandated percentage of earnings that goes as ABS ranges from 0.1 to 0.5 per cent of sales, depending on the company’s revenue. Data gathered from the Environment Ministry reveal this amount to be just over Rs.5.7 crore (documents do not mention the financial year for the said amount). However, Rangaiah Sreenivasa Murthy, a former Indian Forest Service officer, pointed out: “Madhya Pradesh alone has the ABS potential of over Rs.100 crore a year, but the amount collected was around Rs.1.61 crore a year.” Murthy calculated the figure from a tradable bio-resources list, prepared after validating it with the federations involved in the manufacture of medicinal and beauty products, two major industries that contribute to ABS, according to him.
An overview of the annual turnovers of large Ayurveda companies shows that the potential for ABScould be significantly higher. This perhaps explains why the industry is lobbying hard against paying ABS. Divya Pharmacy Ltd and Dabur, two of the major companies, earned Rs.10,66,446 crore and Rs.11,529 crore, respectively, in 2022-23, according to their financial statements and annual reports. Even a 0.5 per cent ABS on their ex-factory sales would amount to thousands of crores.
Fair and equitable
One of the main objectives of the Biological Diversity Act, 2002, is the conservation of biological resources and fair and equitable benefit sharing. However, the Act in its amended form goes far from the original intent and gravely hampers the work of institutions that could hold large corporations accountable because it decriminalises all offences by removing the punishment clause and only imposing fines for violations.
The Act was enacted to fulfil India’s obligation to the Convention on Biological Diversity, 1992. One of the objectives of the convention, along with the Nagoya Protocol (a supplementary agreement to the convention that dealt with the fair and equitable benefit sharing of resources listed in the convention), was the payment of ABS. Developing nations had gathered to address the misappropriation of bio-resources (plants, herbs, farmlands) and secure rightful entitlements for people whose resources were being extracted and exploited. This resulted in the enactment of the 2014 Guidelines on Access to Biological Resources and Associated Knowledge and Benefits Sharing Regulations. These guidelines serve as regulations to determine the amount industries are liable to pay traditional forest communities.
The amended Biological Diversity Act exempts “AYUSH practitioners and traditional knowledge holders” from paying ABS, potentially denying fair compensation to tribal and local communities. The amended Act removes criminal penalties for violations, replacing them with fines only. This weakens accountability for large corporations exploiting biodiversity resources.
- The amended Biological Diversity Act exempts “AYUSH practitioners and traditional knowledge holders” from paying Access and Benefit Sharing (ABS), potentially denying fair compensation to tribal and local communities.
- The amended Act removes criminal penalties for violations, replacing them with fines only. This weakens accountability for large corporations exploiting biodiversity resources .
- Overview of Ayurveda companies’ turnovers suggests significantly higher potential ABS revenue compared to current collections, justifying stricter implementation of the Act.
How it played out
Revisiting the guidelines and reviewing the Act were the main tasks of the expert committee, headed by the retired IAS officer, Amarjeet Ahuja. The committee’s other members were M.K. Ramesh and Sujata Arora. It was given a month’s time to complete a process that involved consultation, brainstorming, and seeking comments from all stakeholders.
It held joint sessions with a committee constituted by the National Biodiversity Authority (NBA), an independent national body formed to oversee the implementation of the Act. At the State and district levels, the implementation is handled by the SBBs and the Biodiversity Management Committees, respectively. A review of the file notings of the correspondence within the NBA during the discussions around the amendments revealed that it was the NBA’s technical wing rather than the legal wing that was involved in the discussions; it is the legal wing that is equipped to advise and assist in legislative matters.
The expert committee sent invitation letters to various stakeholders. T. Rabikumar, NBA secretary, in a letter dated January 26, 2019, to Dr D.C. Katoch, Adviser to the Ministry of AYUSH, requested the latter to identify at least 15 members of the AYUSH industry for consultation, as they are among “the important stakeholders”.
Interestingly, members of the AYUSH industry equated themselves with “benefit claimers”, a term that is used in the Act for the people who are the actual conservers of biological resources and who hold traditional knowledge over generations, and are hence entitled to receive ABS. The AYUSH Ministry agreed with the companies and compared them to vaids and hakims, the practitioners of traditional medicine who are exempted from paying ABS under the Act. They claimed that it was vaids who started companies like Dabur or Hamdard. The expert committee however, said that this was “logic turned on its head by mixing the concept of conserver and knowledge creator” and shot down the argument.
The demand to exempt the AYUSH industry from ABS got the support of the National Medicinal Plants Board (NMPB), which is mandated to oversee matters relating to the development of medicinal plants at the Ministry of AYUSH. J.L.N. Sastry, chief physician at the Ayushman Ayurvedic Centre, Kakinada, Andhra Pradesh, and former CEO of NMPB, likened the ABS payment requirement to GST. He said that ABS was “in addition” to the tax already being paid by them.
Sastry proposed an alternative NMPB-VRIKSH-AYUSH model instead, which would encourage AYUSH industry manufacturers to buy raw materials directly from local communities, farmers, and tribes. According to him, this would bring money directly to farmers, help double their income, and generate Rs.5,000 crore for them while eliminating middlemen and leaving 10 to 20 per cent margins for manufacturers too. Sastry contended that this would ultimately result in “ease of doing business” by removing the compliance requirement of intimating the SBBs.
This idea saw firm opposition. J. Justin Mohan, Secretary to the NBA, said in response to Sastry’s proposal that the buy-back agreement proposed by the NMPB was not a substitute for the globally negotiated principle of ABS. “However, NMPB is free to implement the project as an AYUSH Ministry scheme to support farmers involved in medicinal plant cultivation,” Mohan said. He pointed out that the ABS amount was an “incentive for those communities who conserve the biological resources” and emphasised the need for “approval of NBA/SBB”.
The Ministry of Tribal Affairs also voiced its objection. In file notings, the ministry’s Joint Secretary, R. Jaya, said the use of traditional knowledge “should be pre-informed to the local communities” to bring more transparency in determination of ABS. This would also safeguard the Forest Rights Act, 2006, which gave tribal people and other forest dwellers a bundle of rights to secure their cultural, social, and economic fabric. The ministry further suggested devising mechanisms to include regional and local bodies like the Gram Sabha and the Community Forest Rights Management Committee in the decision-making process.
Another blow to the Biological Diversity Act was the decriminalising of offences mentioned earlier and changing the adjudicatory authority to the Joint Secretary of the ministry. This weakened the stature of SBBs as a statutory body. Murthy said: “These bodies were the final authority in deciding the obligation and amount that needs to be paid. The amendment reduces them to paper tigers, diluting their autonomy and results in robbing the rights of the locals from whom the produce is extracted.”
Ramesh said that the change “seeks to monetise the violation of the companies and reduces the status of the conserver communities to the level of people who are commercialising bio-resources”. “This dilutes the law, which was one of the first pieces of legislation worldwide that equipped them as rights holders,” he said.
The change was made in defiance of the concerns raised by the SBBs during the expert committee consultation, which highlighted issues like manpower shortage, structural weaknesses due to officers on deputation and secretariat staff on contractual basis, and the lack of a legal cell with permanent legal officers to investigate financial and ownership issues. They also demanded that the power of SBBs to grant approval be defined more explicitly to avoid future conflicts with AYUSH manufacturers.
After brief consultations with stakeholders, the expert committee came up with over 60 recommendations. One of which was to exempt cottage and small-scale AYUSH industries from ABS, for they contribute towards the conservation effort by employing local people. The committee, however, did not specify a turnover ceiling to define such small industries.
At the stage when comments were sought on the Bill, surprisingly more changes were added by inserting the terms AYUSH practitioners and traditional knowledge-holders among those who would be granted ABS exemption. During the debates in the Rajya Sabha, Jairam Ramesh, chair of the Standing Committee of Science and Technology, Environment, Forests and Climate Change, said: “This may well open the door to large-scale exemptions and is undesirable since a registered AYUSH practitioner may well be having informal links with a collective, which may or may not have a company structure.”
In effect, the ABS provision that came about as a result of years of resistance and petitions by developing nations to ensure the autonomy of traditional communities over their traditional resources was painted as a hurdle in the compliance procedure only to increase therevenue margins of huge corporations and leave nothing for the communities and conservers.
Priyansha Chouhan is Senior Research Fellow at Land Conflict Watch, an independent network of researchers studying land conflicts, climate change, and natural resource governance in India.