Legal Issues in the uncapitalized industry for adult toys in India
The sexual wellness industry or the adult products industry is a multi-dollar industry worldwide, however, its market in India is barely touched and not fully utilised. The moral, cultural and legal connotations attached to such products create hindrance to market them in India. E-commerce platform offer privacy, discreetness, convenience, home delivery options, affordable pricing etc. which make them suitable for dealing in such lifestyle products. In recent years, very few start-ups have been able to launch online stores dealing in sexual wellness and lifestyle products such as condoms, lubricants, gels, products meant to promote sexual pleasures such as adult toys, role play costumes, board games etc.
While no manufacturing of such adult products is carried out in India, the sellers engage in trading activities either through the distribution or aggregator led model, whereby, international brands showcase their products on the e-commerce portal and deliver at the door steps ordinarily by way of export to customers in India.
This article aims to understand the legal implications in business of dealings in the adult products in India and offer insight into how these impairments affect the business.
Although the sexual wellness industry is on a path of steady growth with ample demand for the products in India, the laws in India specifically those relating to ‘obscenity’ restrict the distribution, marketing and sale of such products and contravention of such laws may lead to both fine and imprisonment.
Applicable laws that may raise red flags are-
- Section 292 of the Indian Penal Code, 1860 (IPC) provides that any book, pamphlet, paper, writing, drawing, painting, representation, figure or any other object will be obscene if it is lascivious, appeals to the prurient interest or tends to deprave and corrupt the minds of persons. The section penalises the sale, public exhibition, distribution, import and export of any such obscene objects and punishes the wrongdoer with imprisonment up to 5 years and fine which may extend to five thousand rupees.
- Section 67 of the Information Technology Act, 2000 mirrors the provisions of obscenity under IPC with regard to electronic form and provides that the publication and transmission of any material which is lascivious or appeals to the prurient interest in electronic form is punishable under the Act.
- Foreign exchange laws of India restricts retail trading in e-commerce as well as multi-brand retail trading in India for entities having foreign investment. Any contravention with the provisions of the foreign exchange law will be penalized to up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable. Further penalty may also be imposed on continuation of the contravention.
In addition, various other statutes may be attracted such as the Drugs and Cosmetics Act, 1940, the Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954 and the Indecent Representation of Women (Prohibition) Act, 1986. While, import of these products in India, the provisions of Customs Act 1962 will get triggered, wherein, the Central Government is empowered to prohibit the import of any such products that may be in contravention of public order and standards of decency and morality.
The main issue that arises with respect to sexual wellness or adult products is that no specific provisions of law addresses the use, manufacture, sale or import of adult products. However, it is illegal to import or sell ‘obscene products’, the rules for obscenity make no explicit or implicit reference to adult products making them susceptible and open to individual interpretations especially in the cases of import and custom clearance of such products. In the absence of definite laws, the interpretation of adult products is upon the discretion of the custom officials which results in goods being seized and confiscated. The goods are left lying with the customs leading to inconvenience to the customers and losses to the companies.
There have been multiple cases where nature and legality of adult products has been discussed and interpreted by the courts in India. The courts have been of the opinion that an article or instruction merely suggesting methods for stimulating the enjoyment of sex is not obscene. Acquisition of knowledge for enjoyment of sex through various means is not a prohibited activity per se, however, it is subject to a lot of restrictions.
Thus, it can be inferred that prohibition on adult products will not be sustainable if the legal necessities are duly fulfilled. Non-application of this standard would not only be an erroneous reading of the law but may also result in violation of Article 19(1)(g) of the Indian Constitution, that provides the fundamental right to carry on any trade or business so long as it is within the purview of law. The issue of legality of adult products depends not only on the nature of the product but also how these products are marketed, displayed and presented to the end consumers. Further, companies must evolve to appropriate business models that may be fundamentally strong and within the legal boundaries.
Due to the lack of fundamentally strong business models, while in the background of unclear regulations for the adult products industry, the businesses have not witnessed its due investments. .
The sexual wellness or adult products form a grey area in law. While, ‘obscene products’ are banned in India, the laws remain speculative upon the interpretation of adult products. The lack of distinction between sexual wellness or lifestyle products and products categorically meant for sexual pleasure further adds to the conundrum. In order to fully utilize the potential of the sexual wellness industry, the companies must adopt a better line of structure and streamline their business activities such that all legal limitations and conditions attached to the use, sale and import of adult products are duly complied with. The companies must obtain all legal sanctions from various authorities such as under the Customs Act 1962 etc. so that the unexplored prospects of the sexual wellness industry are fully exploited within the ambit of law.