India is a country of particular importance to GNI. As the world's largest democracy, the country trails only the US and China in the number of Internet users, despite an Internet penetration rate of only 10 per cent, he added.

Hundreds of millions of Indians are on the verge of gaining Internet access, particularly via mobile devices, with huge opportunities for users as well as serious challenges.

"India's robust tradition of freedom of expression and its dynamic ICT (information communication and technology) sector are threatened by anxieties around issues such as hate speech, political criticism, and obscene content," Brooks said.

The Information Technology Act, 2000 was amended by the Information Technology (Amendment) Act, 2008 and was enforced on October 27, 2009. It provides legal framework to address various types of cyber crimes and prescribes punishment.

In 2011, the government had notified the IT (Intermediary Guidelines) Rules 2011 under Section 79 of the Information Technology Act pertaining to liability of intermediaries.

It requires Intermediaries, which include national and international social networking sites, to observe due diligence while discharging their duties.

The intermediaries shall inform the users of computer resources not to host, display, upload, modify, publish, transmit, update or share any information that is harmful, objectionable, affect minors and unlawful in any way.

According to GNI's report, online platforms that support user-generated content can become an important part of India's Internet economy and contribute around Rs 2.49 lakh crore (USD 41 Billion) by 2015, in addition to the contribution of other elements of the Internet economy.

"Two years from now their GDP contribution may increase to more than 1.3 per cent, provided that the current legal liability regime is improved," it added.

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