India

Introduction Japanese operating lease with call option (“JOLCO”) is a financing structure that enables airline companies the ability to expand their fleet and optimize capital efficiency. JOLCO combines the benefits of an operating lease with the flexibility of a purchase option at the end of the lease term. Under JOLCO, a Japanese special purpose company (“Japanese SPC”) which is typically backed by a combination of Japanese small and medium enterprise equity investors and financial institutions, purchases the aircraft and leases it to a lessee. While in principle, JOLCO is viewed as an operating lease as it provides the lessee with a genuine right to return the aircraft to the lessor at the end of the lease term, in practice, JOLCO often resembles financial leases. Unlike traditional Japanese operating lease arrangements, JOLCOs may be recorded in the lessee’s balance sheet as the lessee typically exercises the call option at the end of the lease term, effectively acquiring ownership after having enjoyed most of the benefits and risks associated with ownership during the lease period. Potential structure in the Indian context The Japanese SPC, as borrower, shall enter into a loan agreement with lending institution(s) (“Lender(s)”). Pursuant to the loan agreement, the Lender(s) shall provide the debt portion of the aircraft acquisition cost (usually consisting of 70-75% debt) to the Japanese SPC. The Japanese SPC shall utilize the debt portion and the equity portion (usually consisting of the balance 25-30% equity) invested by Japanese small and medium enterprise investors, to acquire the aircraft from an aircraft manufacturer (“OEM”). The Japanese SPC shall then lease the aircraft to an entity incorporated in the Gujarat International Finance Tec-City (“GIFT City Entity”), and the GIFT City Entity shall onward sub-lease the aircraft to the airline company in India (“AOC Holder”). The lease rentals payable by the AOC Holder to the Gift City Entity and by the Gift City Entity to the Japanese SPC shall be assigned to the Lender(s) and other finance parties. The aircraft itself shall be secured by way of mortgage. Key challenges in adopting JOLCO structures in India Although there are instances of Indian airline companies using JOLCO structures (when in the mid-1990s, the then government owned Indian Airlines and Air India entered into JOLCOs with certain Japanese leveraged lessors as part of their fleet financing strategy for about 12 Airbus A320s), its adoption remains sparing in light of legal, regulatory, and structural hurdles. Some of these are as follows: Unfavorable tax withholding under the India-Japan double tax avoidance agreement (“DTAA”): Pursuant to the DTAA, lease payments are subject to a withholding tax of 10%, which has historically acted as a deterrent. Alternative leasing structures involving jurisdictions such as Ireland which has a more favorable tax treaty with India offers lower effective costs. However, with the option of leasing the aircraft to the Gift City Entity which in turn shall sub-lease the aircraft to the AOC Holder, the tax complications may now be mitigated. Complexity of multiple shareholder involvement: JOLCO transactions typically involve Japanese Tokumei Kumiai (“TK”) structures, which pool investments from multiple small and medium-sized investors. These shareholders often have voting rights and participate in key decisions, requiring their consent at various stages of the transaction. This adds a layer of governance complexity, especially in determining whether majority consent or unanimous approval is required, thereby often delaying processes. Classification as an operating lease: While JOLCO is economically akin to a financial lease, under applicable Indian foreign exchange laws, operating leases are not a recognized form of external commercial borrowing. Therefore, it is presently untested whether the Reserve Bank of India (“RBI”) would view such lease arrangements as operating leases or financial leases and whether prior approval of the RBI would be required for entering into such transactions. Structural incompatibility with current aviation lease models: Indian airline companies prefer setting up their own wholly owned subsidiaries in Gift City (“GIFT WOS”). The aircraft is typically leased to the GIFT WOS and then the GIFT WOS back-to-back leases the aircraft to the airline company in India. However, in a JOLCO structure, it is unclear whether the Japanese investors would be comfortable in leasing the aircraft to the GIFT WOS or would they rather set up their own GIFT City Entity. There are also complications surrounding the concept of beneficial ownership and foreign exchange challenges, which would need to be evaluated. Conclusion While JOLCO structures offer a compelling and tax-efficient leasing solution internationally, its adoption in India remains largely untested due to regulatory uncertainties, structural mismatches and the operational complexity of involving multiple Japanese TK investors. However, the emergence of GIFT City as a growing international financial hub, along with the tax exemptions and regulatory flexibility available to entities established within it, presents a promising pathway for the potential adoption of JOLCO structures in India.  As India continues to liberalize its leasing environment, particularly in the aviation sector, JOLCO may become a viable financing option for Indian airline companies in the times to come. Authors: Ankit SinhaPartner, Juris CorpEmail: [email protected] Yashassvi PeriwalAssociate, Juris CorpEmail: [email protected] Vaishnavi PanyamTrainee, Juris CorpEmail: [email protected] Disclaimer: This article is intended for informational purposes only and does not constitute a legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This article is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial / quasi-judicial authorities may not take a position contrary to the views mentioned herein. About Juris Corp Founded in 2000, Juris Corp is a law firm adding value in Foreign Investments into India, Banking, Securities, Derivatives, Corporate Commercial, Joint Ventures, M&A Private Equity, Real Estate, Dispute Resolution and International Arbitration, Bankruptcy and Restructuring. Firms’ Objective Provide unbiased and unmatched legal services in our areas of practice. Be the Preferred Law Firm for our clients and take that relationship forward by becoming more than a legal advisor: Being their business advisors. Accolades And Recognition Juris Corp has been consistently ranked in the top tiers over the years in Banking & Finance, Capital Markets, Corporate M&A, Dispute Resolution, Foreign Direct Investment, Real Estate, Private Equity, Securitisation & Structured Finance and Taxation by several institutions. 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Introduction Clinical Trials have been critical to the healthcare sector, serving as the cornerstone of drug development and medical device safety. Without Clinical Trials, it would be impossible to characterize the benefits and risks of a treatment or evaluate the efficacy of a medicine. The market for Clinical Trials in 2024 has been valued at USD 1.42 billion and is expected to grow at a CAGR of approximately 8% (eight percent) until 2030.[1] The Indian government basis the trends of budgetary allocation has further been observed to have steadily increased its budget allocations for health research indicating a steady 11% increase in budgetary allocation in the past years currently making the sum total of the budgetary allocation to health research to INR 3,901 crores.[2]   Additionally, fiscal incentives under the Income Tax Act, 1961, such as allowing up to 100% tax deductions on expenditure for scientific research including clinical drug trials, coupled with the product patent regime under the Patents Act, 1970 ensuring strong protection for proprietary drugs, incentivized multinational corporations to establish and expand in-house research and development in India.   Foreign Direct Investments in India In lieu of the promotion of clinical research through financial incentives and requisite patent protection being provided, India has observed a steady influx of foreign direct investments in pharmaceutical and medical devices sector. For instance, in the previous financial year, India recorded foreign direct investment (“FDI”) inflows of INR 19,134 crores.[3]   While the Consolidated FDI Policy, 2020 (“FDI Policy”), as well as the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (“NDI Rules”) do not provide a specific classification for clinical research organizations (“CRO”)[4] under any business sectors explicitly, resulting in such unclassified activities to fall under the residual category for which 100% FDI is permitted under the automatic route, subject to applicable laws, regulations, security, and other conditionalities.   Regulatory Framework With the growing emphasis on incentivizing clinical research in India, it became necessary to regulate and streamline clinical research processes with patient safety as the primary consideration. To this end, the licensing and regulatory framework in India was further strengthened through the introduction of the New Drugs and Clinical Trials Rules, 2019 (“NDCT Rules”). In the present regulatory framework, clinical research in India is primarily governed by the NDCT Rules, which have superseded the earlier provisions of Schedule Y of the Drugs Rules, 1945. These rules were introduced to streamline the regulatory process, enhance participant protection, and align India's clinical research regulations with international standards. This article provides an overview of the regulatory framework governing the conduct of clinical research under the NDCT Rules read with the Drugs and Cosmetics Act, 1940 and the emerging legal perspective and challenges in clinical research in India.   NDCT Rules regulates the following forms of clinical research: (i) clinical trials (as defined under NDCT Rules); (ii) bioequivalence and bioavailability studies; (iii) biomedical and health research.   Stakeholders of Clinical Research Clinical research refers to the systematic study of pharmaceutical products in human participants to evaluate their safety, efficacy, and overall risk–benefit profile prior to regulatory approval and commercial distribution. The conduct of such research typically involves three key entities: the pharmaceutical companies (“Sponsors”), contract research organizations (“CROs”), and ethics committee. With the increasing complexity and scale of clinical research, Sponsors engaged in the manufacture of drugs for global distribution are increasingly relying on CROs to assist in the design, management and conduct of clinical research. To ensure that CROs possess the requisite competence, including infrastructure, qualified personnel, and quality systems to undertake clinical research-related activities, the revised regulatory framework prescribes specific obligations such as appointing responsible and trained personnel, maintaining documented standard operating procedures, ensuring proper delegation of trial-related duties, implementing quality assurance and control mechanisms, regularly training staff, ensuring investigator preparedness, maintaining comprehensive trial records for prescribed periods, and upholding strict confidentiality and regulatory compliance throughout the conduct of the study. To regulate and streamline the operations of CROs, the new regulatory framework mandates registration of the CROs with the Drugs Controller, India before conducting any Clinical Trial, bioavailability/ bioequivalence study or biomedical and health research. Applications for such registration must be made in Form CT-07B. Registered CROs must comply with good clinical practices guidelines for the conduct of clinical studies in India, formulated by the Central Drugs Standard Control Organization and adopted by the Drugs Technical Advisory Board and maintain proper documentation.   Stages of Clinical Research Pre-clinical studies Prior to undertaking human clinical research in India, one of the general principles under NDCT Rules is to first undertake animal clinical testing, such testing may include animal pharmacology data and toxicology data. However, the Indian government to ensure ethical pre-clinical studies ensures that ethical standards with minimal animal cruelty are undertaken and has established the Committee for the Purpose of Control and Supervision of Experiments on Animals (“CPCSEA”), which has the authority to regulate and oversee all animal experimentation in the country under Prevention of Cruelty to Animals Act, 1960.   For any pre-clinical studies requiring animal experimentation being undertaken, an entity requires the same to be registered with CPCSEA under the Breeding of and Experiments on Animals (Control and Supervision) Rules, 1998. Establishments registered under CPCSEA are further mandated to constitute an Institutional Animals Ethics Committee (“IAEC”). IAEC once constituted is required to review and approve all types of protocols for research involving small animal experimentation before the start of the study.[5] For approval of experimentation on large animals, the request should be forwarded to CPCSEA in the prescribed manner with recommendation of IAEC. The primary duty of IAEC is to focus mainly on ensuring ethical and methodical handling of animals during and after experiments, so that they have less suffering.   Furthermore, IAEC is required to maintain detailed records of experiments, including particulars about animals used, in specified formats and inspect the animal housing facilities from time to time.   Human Clinical Research I. Pharmaceutical Clinical Trials ( a) Phases of Clinical Trials Under NDCT Rules, ‘Clinical Trials’ are defined as systematic human studies that generate data on clinical, pharmacological, and adverse effects to determine safety, efficacy, and tolerance of new or investigational drugs. The development process consists of four phases as provided below: Phase I: Tests safety and dosage in small groups of healthy volunteers; determines pharmacokinetics and maximum tolerated dose Phase II: Evaluates effectiveness and side effects in limited patients with target condition Phase III: Confirms efficacy and safety in larger, diverse patient populations; provides basis for marketing approval Phase IV: Post-marketing surveillance to monitor long-term effects and rare adverse events in real-world settings   (b) Registration Requirements Under the NDCT Rules, Clinical Trials require permission from the Drugs Controller, India. This centralized approval system ensures consistent application of standards across the country. Applications must be submitted in Form CT-04 with supporting documents as specified in the Second Schedule and fees as specified in the Sixth Schedule. Upon scrutiny, if the authority is satisfied that all requirements have been met, it may grant permission for conducting Clinical Trial. Such decisions must be taken within 90 working days, failing which the application shall be deemed to be approved. In such cases, the applicant must notify the Authority, which shall be taken on record as deemed approval and treated as legally valid authorization to initiate the Clinical Trial. All trials must be registered with the Clinical Trial Registry of India before enrolling the first subject. This registration requirement enhances transparency and allows public access to information about ongoing trials. Trials must follow the general principles and practices specified in the First Schedule of the NDCT Rules.   (c) Role of ethics committees and informed consent Any entity intending to undertake Clinical Trials should obtain the approval of an ethics committee. Such ethics committees must be registered with the Drugs Controller, India in Form CT-01. This registration ensures that ethics committees meet minimum standards for protecting research participants. They must comprise at least seven members from diverse backgrounds including medical, non-medical, scientific, and non-scientific areas, with at least 50% (fifty) being non-affiliated with the institution. This composition requirement ensures independent oversight and diverse perspectives. The committee must include at least one lay person, one woman member, one legal expert, and one independent member from another related field. For reviewing protocols, a quorum of at least five specific members is required. Ethics committees are responsible for safeguarding the rights, safety, and well-being of trial subjects.   II. Additional types of clinical research  (a) Regulatory framework for Bioavailability and Bioequivalence Under the NDCT Rules, any person, institution, or organization intending to conduct a bioavailability study or bioequivalence study of a new drug or investigational new drug in human subjects must obtain prior permission from the Drugs Controller, India. This centralized approval system ensures uniform standards of review and monitoring. Applications must be submitted in Form CT-05 with supporting documents as specified in the Second Schedule and the prescribed fees under the Sixth Schedule. Upon review, the Central Licensing Authority may grant permission in Form CT-07. In certain cases, deemed approval may arise under the proviso to the prescribed timelines, in which event the applicant must notify the Central Licensing Authority in Form CT-07A prior to initiating the study.   All bioequivalence and bioavailability studies must be reviewed and approved by a registered Ethics Committee before enrolment of the first subject. Ethics Committees are required to be registered with the Drugs Controller, India in Form CT-01 and must comply with the composition and quorum requirements under the Rules to ensure independence and adequate representation. The oversight of Ethics Committees is critical to safeguarding the rights, safety, and well-being of study participants. In addition, permissions granted under Form CT-07 remain valid for a period of one year, unless suspended or cancelled earlier, and all conditions applicable to Clinical Trials of new drugs apply mutatis mutandis to bioequivalence and bioavailability studies.   (b) Regulatory Framework for Biomedical and Health Research For biomedical and health research not involving new drugs, the ethics committees must be registered with the National Ethics Committee Registry for Biomedical and Health Research. This separate registration pathway acknowledges the different risk profiles of such research.   (c) ICMR Guidelines In addition to the above specified statutory regulations, ICMR has issued guidelines that govern research in specific domains such as stem cell research, gene therapy and other advanced biomedical areas. Where clinical research is undertaken in these specialised fields, the respective ICMR guidelines are required to be complied with, in addition to the general regulatory framework.   III. Alternative Medicine Research Ayurvedic, Siddha, and Unani Clinical Research: For traditional medicine systems, researchers must follow AYUSH guidelines including the Good Clinical Practice Guidelines for clinical research in Ayurveda, Siddha and Unani Medicine, 2013 and ICMR Guidelines for Biomedical and Health Research Involving Human Participants.   Inspection and Compliance Clinical Trial sites and bioavailability or bioequivalence is subject to inspection by authorized officers from the Drugs Controller, India. Non-compliance can result in suspension or cancellation of trial permissions, rejection of trial results, or debarment of investigators and Sponsors conducting future trials. Accordingly, CRO is required to ensure that all necessary documentation is maintained for at least 5 (five) years after trial completion or 2 (two) years after marketing approval, whichever is later.   Serious Adverse Events Under the NDCT Rules, an “adverse event” is defined as any untoward medical occurrence (including a symptom, disease, or abnormal laboratory finding) during treatment with an investigational drug or pharmaceutical product in a patient or trial subject, which does not necessarily have a relationship with the treatment. A SAE refers to any such occurrence during a trial or study that results in death, permanent disability, hospitalization (or prolongation thereof), life-threatening events, congenital anomaly, or other significant incapacity. India’s regulatory framework imposes stringent obligations on Sponsors, investigators, and Ethics Committees with respect to the reporting, review, and redressal of serious adverse events (“SAEs”), across all categories of clinical research including (i) Clinical Trials of new drugs or investigational new drugs, (ii) bioavailability and bioequivalence studies, and (iii) biomedical and health research.   (a) Clinical Trials of new drugs or investigational new drugs Under the NDCT Rules, Sponsors are required to provide free medical management for any trial-related injury, for as long as required. In the event of a trial-related death or permanent disability, financial compensation must be paid to the subject or their legal heirs according to the formula specified in the rules. The initial report for serious adverse events must be reported to the Drugs Controller, India, Ethics committee within 24 (twenty four) hours and a detailed report would be required to be submitted within 14 (fourteen) days, in each case, from the time of occurrence of such event. This reporting requirement enables timely investigation and intervention. Further, post-trial access to investigational drugs may be provided free of cost under specific conditions.   (b) Bioavailability and bioequivalence studies The same standards for medical management, SAE reporting, and compensation applicable to Clinical Trials will apply mutatis mutandis to bioavailability and bioequivalence studies.   (c) Biomedical and health research Such research must comply with the National Ethical Guidelines for Biomedical and Health Research Involving Human Participants, 2017 issued by the Indian Council of Medical Research. This regulation mandates registration with the Clinical Trial Registry of India prior to conducting any clinical research for biomedical and health research, obtaining informed consent from each participant, and maintaining quality assurance throughout the trial. Sponsors are also obligated to report SAEs within prescribed timelines, provide free medical management for adverse events (where such events are causally linked to the research), and offer compensation for trial-related injuries.   Manufacturing Permission for New Drugs and Investigational New Drugs Under the NDCT Rules, no person may manufacture a new drug or an investigational new drug for the purposes of conducting a Clinical Trial, bioavailability or bioequivalence study, or for examination, test, and analysis, without prior permission from the Central Licensing Authority. An application for such permission must be submitted in Form CT-10, along with the documents prescribed in the Fourth Schedule and the applicable fee under the Sixth Schedule.   On receipt of the application, the Central Licensing Authority scrutinizes the information provided and may, if satisfied that the requirements of the Rules are met, grant permission in Form CT-11 within ninety working days. If deficiencies are noted, applicants are given an opportunity to rectify them within a specified period. Where no communication is received within ninety working days, permission is deemed to have been granted, subject to the filing of Form CT-11A for record. The permission remains valid for three years, extendable by one year in exceptional cases.   Emerging Legal Perspectives and Challenges in Clinical Research in India While NDCT Rules have modernized India’s clinical research ecosystem, new-age technologies and evolving research models bring fresh legal challenges. Policymakers, regulators, Sponsors, and CROs must anticipate and address these to sustain India’s competitiveness while ensuring participant protection:   I. Personal Data Protection Framework The present regulatory framework governs ‘sensitive personal data’ which includes medical records and history.[6]Sponsors and the CROs handling such sensitive personal data must obtain consent before collection, use the data only for the stated purpose, maintain reasonable security practices, and allow individuals to review, correct, or withdraw their data. They are also required to adopt a documented privacy policy, appoint a grievance officer, and ensure lawful transfer of such data outside India.   India has recently enacted the Digital Personal Data Protection Act, 2023 (“Act”) and issued draft Digital Personal Data Protection Rules, 2025 (“Draft Rules”), which together create a comprehensive framework for safeguarding personal data in the digital space. However, these provisions are not yet in force. Clinical research activities may qualify for an exemption under the Act, where personal data is processed solely for research purposes.[7] This exemption is not automatic, the Draft Rules clarify that such processing must comply with standards set out in the Second Schedule of the Draft Rules, including lawful use of data, collecting only what is necessary, ensuring accuracy, limiting how long data is kept, and adopting reasonable security safeguards.[8] Further, the entity processing such data must maintain accountability for effective observance of these standards while ensuring the data is not used to make decisions specific to a Data Principal.[9] If these conditions are met, Sponsors or CROs conducting clinical research may be eligible for exemption from the provisions of the Act.   These regulations further assume particular significance in the context of genomic data-based trials, which are expanding in oncology and rare diseases such as lysosomal storage disorders, thalassemia, muscular dystrophies, and other neuromuscular conditions. Under the present regulatory framework, genetic data is regarded as sensitive under Indian jurisprudence[10], requiring informed consent that expressly addresses long-term storage, secondary uses, and potential commercialization. Since many genomic datasets are analyzed abroad, their transfer will be subject to government whitelists and the safeguards prescribed under the present regulatory framework i.e., Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, as discussed above until the Act is brought into force. Moreover, because genomic findings may inadvertently reveal health risks for family members, such trials necessitate more sophisticated disclosure and counselling frameworks to uphold ethical standards.   Further, artificial intelligence (“AI”) is increasingly used in clinical research for patient screening, risk prediction, and monitoring, but raises concerns of bias, liability, and ethical compliance. Unlike the US FDA[11], India has yet to establish AI-specific accountability frameworks, making regulatory clarity urgent.   II. Decentralized Clinical Trials Another emerging concept within the landscape of Clinical Trials is decentralized clinical trials (“DCTs”) leverage digital technologies to conduct research remotely, reducing participant burden and expanding access. Several emerging start-ups are moving into the DCT landscape. However, this emerging approach faces a significant regulatory vacuum in India. The regulations governing Clinical Trials in India lack specific provisions for governing the specific challenges in relation to virtual trials such as confidentiality, data privacy, maintenance of digital trail, electronic consent, acceptable mode of digital Clinical Trials. While telemedicine gained regulatory recognition in 2020[12], these guidelines explicitly exempt research and evaluation activities, leaving DCTs without clear direction for remote participant interactions. While the regulations governing Clinical Trials do not specifically provide for safeguards of the sensitive data collected during the course of Clinical Trials, limited comfort can be drawn from the provisions of Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, which prescribes certain safeguards as specified in the preceding paragraphs. With the global shift toward decentralized methodologies accelerated by COVID-19, this regulatory void presents both challenges and opportunities. Further, the ICMR’s draft guidance on digital health and remote clinical trials (released in May 2025) is the first step toward recognizing e-consent, remote monitoring, and secure data storage as legitimate practices.[13] Yet, these are not binding, and hence, a lack of statutory recognition for e-consent raises enforceability concerns if challenged. Thus, companies must navigate uncertain requirements while regulators have the opportunity to develop forward-looking frameworks that balance innovation with participant protection in India's rapidly evolving clinical research landscape.   Technology-enabled trials tend to blur traditional lines of responsibility. As regards telemedicine trials, in case of an SAE, ambiguity continues to exist on whether liability rests with the principal investigator, the teleconsulting doctor, or the Sponsor. Further, malfunctioning of remote monitoring devices may raise product liability questions and thereby whether manufacturers, CROs, or Sponsors would need to bear responsibility for such liability remains to be clarified. Lastly, current Clinical Trial insurance frameworks may not adequately cover risks from digital interfaces and cross-border data handling[14], which may need to be considered while generally considering revision of frameworks to seamlessly adopt technology-enabled trials in India.   III. ESG and Responsible Innovation Globally, pharma companies are being evaluated on ESG metrics.[15] Regulators and investors expect evidence that trials recruit across diverse populations and do not exclude marginalized groups. Trial sponsors may soon be required to disclose the carbon footprint of their operations, including trial site infrastructure and digital data centres. Transparent reporting of trial outcomes, adverse events, and data practices is also becoming part of ESG accountability, influencing investment decisions.   Conclusion India’s evolving regulatory ecosystem supports pharmaceutical development through streamlined clinical research rules, structured FDI treatment, and ethical oversight mechanisms. The 2019 reforms ensure participant safety, while sector-specific FDI policies encourage both Sponsor-led and CRO-led research. Additionally, the Act offers research exemptions for entities meeting prescribed data safeguards. Together, these legal, fiscal, and compliance frameworks make India a competitive, secure, and transparent destination for clinical research, medical device testing, and pharmaceutical innovation. However, with the growing global shift towards decentralized clinical trials, India’s current regulatory framework remains silent on key aspects such as virtual participant engagement presenting both challenges and opportunities for policymakers to craft forward-looking regulations that enable innovation while ensuring robust participant protection. Given technological advancements world over, the future of clinical research will likely be shaped by the ability to integrate digital health technologies, AI, genomic safeguards, liability clarifications, and ESG principles. Policymakers must move quickly to align regulations with these global trends, ensuring India remains a hub for responsible and innovative clinical research. This paper has been written by Anantha Krishnan Iyer (Partner), Shubham Tiwary and Anusha Nookala (Associates). [1]India Clinical Trials Market Size, Share & Trends Analysis Report By Phase (Phase I, Phase II, Phase III, Phase IV), By Study Design, By Indication, By Service Type, By Sponsor, And Segment Forecasts, 2025 – 2030, grandviewresearch (2024) https://www.grandviewresearch.com/industry-analysis/india-clinical-trials-market. [2]Demand for Grants 2025-26 Analysis, prs india (March 01, 2025) https://prsindia.org/files/budget/budget_parliament/2025/DFG_Analysis_2025-26-Health.pdf [3]FDI in India's pharma sector crosses Rs 19,134 crore during 2024-25, economictimes (April 14, 2025) https://cfo.economictimes.indiatimes.com/news/corporate-finance/fdi-in-indias-pharma-sector-crosses-rs-19134-crore-during-2024-25/120268260. [4] ‘Clinical research organization’ or ‘CRO’ wherever referred in this article means a legal entity by whatsoever name called, to which undertakes tasks, duties or obligations regarding clinical trial or bioavailability or bioequivalence study. [5] IAEC can only clear research project proposals that involve experiments on animals higher on the phylogenetic scale than rodents. [6]Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, R. 3. [7]Digital Personal Data Protection Act, 2023, S. 17(2)(b). [8]Digital Personal Data Protection Rules, 2025, Second Schedule. [9]Id. [10]Justice K.S. Puttaswamy v. Union of India 10 S.C.C. 1 (India). [11]US FDA Discussion Paper on AI/ML in Drug Development, 2023. [12]Telemedicine Practice Guidelines, 2020. [13]ICMR Draft Guidance on Digital Health Trials, May 2025. [14] IRDAI (Health Insurance) Regulations, 2016, Regulation 17; see also IRDAI Circular on Clinical Trial Insurance (2021). [15] World Economic Forum, ESG Metrics for Pharma & Biotech (2024).

In the realm of commercial transactions, a term sheet often functions as a crucial stepping stone – establishing the foundation of a proposed deal. As a roadmap for future definitive agreements, a term sheet captures the parties' preliminary intentions and commercial understanding. That said, when a term sheet has a blend of binding and non-binding clauses, it treads a legally ambiguous path. The enforceability of such documents has long been a contentious issue, raising questions about when a term sheet crosses the line from being a mere expression of intent to becoming a legally binding contract. This uncertainty came to a head in the recent high-profile dispute between OYO (Oravel Stays Private Limited) and Zostel (Zostel Hospitality Private Limited). Here, while an arbitral tribunal initially ruled in the favour of Zostel enforcing the rights and obligations outlined in a term sheet signed in 2015, the Delhi High Court (DHC) set aside the arbitration award, underscoring the non-binding nature of the document. The Supreme Court of India (SCI) very recently refused to entertain Zostel’s appeal against the DHC’s judgement on the ground that Zostel should have filed an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, as opposed to moving the SCI with a special leave petition under Article 136 of the Constitution of India. Pursuant to SCI’s observation, reportedly, Zostel has withdrawn its petition. This Article delves into the dispute, the key findings of the arbitral tribunal and the DHC and examines the legal weight that term sheets can (or cannot) carry. OYO – ZOSTEL DISPUTE Background Back in 2015, OYO and Zostel, signed a non‑binding term sheet outlining a potential acquisition where Zostel was to transfer tech assets, IP, employees, and hotels to OYO, in exchange for a 7% stake in OYO. However, it explicitly required execution of ‘final and definitive agreements’ for binding effect - only provisions related to confidentiality, exclusivity, governing law etc. were enforceable. Although some progress was made towards the proposed transaction (such as conducting due diligence and as per Zostel’s claim, transfer of business and personnel to OYO), the definitive agreements contemplated in the term sheet were never signed. This led to Zostel initiating arbitration, claiming specific performance of the term sheet and compensation for OYO’s failure to close the deal. Arbitration Award The arbitral tribunal found that: The term sheet, although styled as ‘non-binding’, created enforceable obligations based on the conduct of the parties.   Zostel had fulfilled its obligations, including the transfer of assets and employees and OYO’s failure to consummate the transaction amounted to a breach. The arbitral tribunal held that OYO was liable to issue 7% equity to Zostel shareholders and pay USD 1 million to the founders as per the term sheet. The tribunal rejected OYO’s argument that the absence of executed definitive agreements rendered the term sheet unenforceable. DHC’s Intervention OYO challenged the above-mentioned arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996. The DHC in Oravel Stays Pvt. Ltd. v. Zostel Hospitality Pvt. Ltd.[1] (OYO Zostel Judgement) set aside the award making crucial observations on the legal enforceability of term sheets and observed that: “… A document that clearly states it is not binding and requires execution of further definitive agreements for its terms to become enforceable, cannot, by conduct alone, be elevated to a legally binding contract …” A few key findings from the OYO Zostel Judgement are set out below: The term sheet expressly stated that it was non-binding except for certain specified clauses. Clause 7 particularly made the closing of the transaction contingent upon the execution of definitive agreements.   There was no evidence that the parties had reached a final and concluded agreement on the essential terms of the deal and therefore, there was no consensus ad idem, a necessary element for the formation of a binding contract. Specific performance can only be granted for enforceable contracts, and not for preliminary documents like term sheets unless there is clear intention and consensus on essential terms. Granting specific performance in the absence of a complete agreement between the parties is contrary to the basic tenets of Indian law of contract and specific performance.   While Zostel had transferred employees and assets, the DHC ruled that these acts, at best, reflected the parties’ preliminary intentions and could not override the explicit non-binding nature of the document – the DHC observed that: “… Even if some steps were taken by the respondent towards performance, these were in furtherance of negotiations and cannot be construed as evidence of a concluded contract …”   Citing Supreme Court of India’s judgement in Bank of India v. K. Mohandas[2], the DHC emphasized that the true construction of a contract depends on the words used, not subsequent conduct. Therefore, this comes as a vital lesson in transactional practice: intention matters, but so does the underlying documents. If the document explicitly states it is non-binding, courts may not interpret it otherwise, regardless of subsequent actions. KEY TAKEAWAYS Drafting precision and clarity is paramount: As is the case with any legal document, it is always advisable to use precise and unambiguous language and clearly demarcate which parts of a term sheet are binding and which are not. Parties should avoid ambiguity, especially when large financial obligations are involved. While the conduct of parties matters, it cannot easily override express and unambiguous terms. The OYO Zostel Judgment reinforces the idea that if parties want an agreement to be non-binding, they must state it clearly and act consistently with that intention.   Execute your definitive agreements before performing: As is evident from DHC’s findings in the OYO Zostel Judgement, even if parties begin to act upon a term sheet, failure to execute definitive agreements can nullify enforceability of such term sheet. The remedy of specific performance may be available only when there is a valid and enforceable contract with a clear meeting of minds on all essential terms. CONCLUSION The law does not look kindly on casual commitments in high stakes deals. The OYO-Zostel episode reaffirms a crucial lesson for dealmakers: a term sheet is more than a memo - it can be the linchpin of enforceable legal commitments. It serves as a cautionary tale on the limits of relying on term sheets. While they are essential tools in deal-making, term sheets are not substitutes for final contracts. While we await SCI’s views on this, the DHC’s judgment reaffirms that in commercial transactions, intent must be reflected in binding documentation, and that conduct alone may not suffice. In the world of high-stakes transactions, what is agreed in written truly matters. Disclaimer: The views and opinions expressed in this Article are those of the authors. This Article is for informational purposes only and does not constitute legal advice. Readers should consult their legal advisors regarding their specific facts and situation.   Shivani (Senior Associate, General Corporate and Transactions) Natasha Tuli (Counsel, General Corporate and Transactions)   [1] 2025 SCC OnLine Del 3377 [2] (2009) 5 SCC 313

Introduction: In today’s digital age, gaming—like any other form of entertainment—has become readily accessible at our fingertips. While playing for recreation is harmless, in some cases excessive gaming can lead to addiction, financial losses, and even serious mental health concerns such as anxiety and depression. This raises an important question: where does one draw the line between healthy interest and harmful addiction? Recognizing the need to address these growing challenges, the Promotion and Regulation of Online Gaming Bill, 2025 was introduced in the Lok Sabha on August 20, 2025, and was passed by the Lok Sabha on the very same day. Subsequently, the Rajya Sabha passed it on August 21st, 2025. On 22nd August 2025, the said Bill received the assent of the President of India and was thereby made the Promotion and Regulation of Online Gaming Act, 2025 (“Act”). What is ‘Online Gaming’?  According to the new Act, online game means any game, which is played on an electronic or a digital device and is managed and operated as a software through the internet or any other kind of technology facilitating electronic communication[1]. The new Act classifies online games into three categories such as e-sports, social gaming and Real Money games. The definition of the same has been given below: E-Sports: Games which are played as part of multisport event. Duly recognized under the National Sports Governance Act, 2025. The outcome of such game is determined solely by factors such as physical dexterity, mental agility, strategic thinking or other similar skills of users as players. This type of game shall not involve the placing of bets, wagers or any other stakes by any person, whether or not such person is a participant, including any winning out of such bets, wagers or any other stakes. Online Social Game: Games which do not involve money or other stakes. These types of games are played majorly for skill development, recreation or educational purpose. Online Money Game: This type of game can be a combination of both skill and chance. The games are often played by a user by paying fees, depositing money or other stakes in expectation of winning which entails monetary and other enrichment in return of money or other stakes; but shall not include any e-sports; Salient Features of the Act: Prohibition of Online Money Games: The Act imposes a complete blanket ban on money games. In addition, it makes it unlawful for any individual to create, aid, abet, induce, or otherwise participate in advertising—across any form of media—that encourages a person to play or promote online games. The Act further prohibits financial institutions, including banks and payment service providers, from processing or authorizing any transactions related to online money gaming services. Authority on Online Gaming: Under the Act, the Central Government is mandated to establish an Authority for the regulation of online gaming. This Authority will consist of a Chairperson along with such other members as may be required to effectively discharge its functions under the Act. The Authority will be empowered to, upon receiving an application, determine whether a particular game qualifies as an online money game. It will also have the responsibility to recognize and categorize online games in the prescribed manner, in addition to carrying out other functions entrusted to it under the Act. Offences and Penalties: Any person offering or facilitating online money games will be liable to punishment with imprisonment of up to three years and a monetary fine of up to one crore rupees. In the case of unlawful advertisements, the prescribed penalty is imprisonment of up to two years, a fine of up to fifty lakh rupees, or both. For involvement in unlawful financial transactions under the Act, the punishment includes imprisonment of up to three years and a fine ranging from one crore to two crore rupees. All such offences have been classified as cognizable and non-bailable under the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023. Conclusion: With the rapid emergence of technology, the online gaming sector in India has witnessed exponential growth, led by major players such as Dream11, MPL, and several other platforms that have become household names. However, with the enactment of the new regulatory framework, these companies are now poised to undergo drastic operational and structural changes. The implications of the Act extend far beyond the gaming companies themselves. On the economic front, the new restrictions are expected to influence employment opportunities, particularly in areas such as software development, content creation, marketing, and customer support, which have so far thrived under the booming online gaming industry. The changes may also impact the market landscape, forcing companies to revisit their business models, product offerings, and revenue strategies. This, in turn, could alter the pace of foreign investments flowing into the sector, as global investors often view regulatory uncertainty as a critical risk factor. Another important area of concern is the advertising ban on money gaming services, which is likely to disrupt multiple allied industries. Media houses, digital advertising platforms, and event organizers—who rely heavily on sponsorships and promotions from online gaming companies—may see a significant decline in revenues. This ripple effect could extend to large-scale sporting events, celebrity endorsements, and even grassroots-level sponsorships, which are often funded by online gaming platforms seeking visibility and consumer engagement. Supporters of this Act argue that the Act protects youth and vulnerable groups from addiction, fraud, and financial losses associated with money gaming, citing cases of suicides and illegal activities linked to these platforms. The Bill aims to shut down routes for money laundering and terror financing, closing loopholes that previously existed in online betting. On the other side, critics warn that the blanket ban could hinder India’s rise as a global gaming hub, depriving talented professionals of opportunities and shrinking the job market across digital entertainment. They also speculate that granting authority to enter any premise-digital or physical, block websites and apps or conduct warrantless searches raises concerns about due process and privacy In essence, while the Act seeks to safeguard citizens from the adverse effects of money gaming, it simultaneously introduces a new era of compliance, restructuring, and strategic reorientation for the online gaming sector and its interconnected industries. The coming years will determine how effectively the industry adapts to these regulations and whether it can continue to grow within the boundaries of the new legal framework. [1] 2(f) of THE PROMOTION AND REGULATION OF ONLINE GAMING BILL, 2025 Authors: Vara Gaur, Partner Shilpa Chaudhury, Principal Associate