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Being an Indian, I can confidently say that neither Facebook nor Google would be blocked..Ever. Unlike China, India is a democratic country and its media is independent from the clutches of the higher authority. Serious objections would be raised from all quarters if the high court decides to go ahead with the ban.
This is a court threatening the block. I'm not sure if the government can just ignore a court decision.
I am pretty sure Google, Facebook and others will appeal in a higher court if this lower court does go ahead with blocking. There are clear provisions in the Indian IT act which prevents the website from any damage until it cooperates with the government and removes the objectionable material.

There has been a huge debate in the recent past whether the categorization of content as 'objectionable' can be done by the Govt. or whether it should be left to courts.

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Not being an Indian, I'm surprised at how often the word "defamatory" appears in discussions by Indian government officials and now this court. Is prior restraint an established Indian tradition? Is criticism of government or other public figures out of bounds? If it is, it's difficult to see how the internet could ever be made to conform.
As discussed earlier, criticism of government or public figures is not out of bounds. Freedom of speech is very important and everyone values that in India. Print/electronic media is not regulated and they often criticize the government. However, they (especially print media) work under certain moral framework like not making any obscene remarks or vulgar attacks. I believe that is the sticking point for all the authorities in India. If traditional media can follow this "moral framework" then why not the Internet? And to be honest, I'm not sure how many people even understand the concept of user generated content based websites or web 2.0; let alone the inner workings of the Internet.

I fear Internet regulation will be the major theme of 2012. All the major countries are looking ways to regulate it. And its really sad.

An old but apt tweet:

Clean drinking water in villages. Primary education for all. Safe streets. No hungry people. Ah never mind. Let's monitor content on the net and block sites.

If we asked a good sample of Chinese citizens if they valued freedom of speech more, I wonder what their choice would be. Based on my Chinese colleagues, it will be probably split down the middle, i.e. 50% of them picking freedom - for reasons of the "lost generation".
Seeing as the general perception of the Indian economy is IT services and call centres, switching off Google would be akin to banning the telephone.
IT services and call centers make up for only 3% of GDP despite the general perception
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I am sure it would be tough, but as we have seen that this could happen, as happened in China. What could be a viable solution? I mean, for future, how can we make it so that blocking two domains is not what it would take for a government agency to block big networks like Facebook and Google.