Mandatory Online Payment of License Fees Proposed by Ministry of Commerce

Mandatory Online Payment of License Fees Proposed by Ministry of Commerce

The main difference between the two provisions is that the existing rule prescribes fees payable to the Copyright Office, whereas the amendment focuses on license fees collected by the licensor or copyright owner.

The Ministry of Commerce and Industry, on June 4, 2025, released a draft notification proposing amendments to the Copyright Rules, 2013. The amendment aims to streamline and digitise the process of paying license fees for copyrighted works communicated to the public through an online system only. Although the provision mentions literary works, musical works, and sound recordings, there is no specific restriction of online payment to any particular type of work. Essentially, the amendment seeks to digitise the copyright regime to align with the current digital economic landscape.

The amendment introduces a new Rule 83(A), requiring an online payment system for copyright licenses. This differs from the existing Rule 83 of the Copyright Rules, 2013, which prescribes fees payable to the Copyright Office. The key difference is that Rule 83 focuses on fees collected by the Copyright Office, whereas Rule 83(A) concerns license fees collected by the licensor or copyright owner.

Moreover, Rule 83 prescribes the procedure to pay fees and specifies the manner in which such fees are payable under the Second Schedule of the Act, whereas Rule 83(A) proposes mandatory online collection of license fees. The new rule requires the owner or licensor of literary works, musical works, and sound recordings to establish and maintain an exclusive online payment mechanism for collecting license fees for communication of the copyrighted work to the public. The rule mandates that all license fee payments be made exclusively through the online system, with no alternative payment methods permitted.

This shift is expected to increase efficiency and accessibility, enabling creators across India to secure their rights more conveniently. Requiring online payment would make it easier to trace, audit, and monitor royalty payments. Digitalisation of payments will automatically record all transactions with timestamps, reducing the risk of non-reporting or deliberate concealment.

However, a concern that may be raised is the enforcement and implementation of the online platform. While the amendment seeks to address issues such as lack of contractual clarity, fragmentation of rights, and inadequate digital tracking systems, without inclusive infrastructure, rights holders with limited awareness or no access may risk further marginalisation. Although the amendment will be easier for copyright societies like IPRS, which have already implemented an online licensing system for almost five years—reportedly collecting over 99.5% of their licensing fees online—it may be challenging for certain entities to adapt to such a royalty collection mechanism.

This digitalised system can reduce the discretionary power of intermediaries, but this will depend on a neutral regulatory authority ensuring fair distribution of royalty payments. If this amendment is enacted, legal contracts signed before the amendment that do not specify digital usage rights may need to be renegotiated and aligned with the new payment system. The effectiveness of this amendment therefore depends on inclusivity, institutional support, and unbiased oversight.