Reforming India’s digital policy

Reforming India’s digital policy

By, Mark Linscott is a former Assistant U.S. Trade Representative

# The United Nations Conference on Trade and Development (UNCTAD) just released its latest World Investment Report and projected that FDI to developing Asian economies could drop by as much as 45%.

Digital Services as panacea for bridging gaps

# One sector that is expected to buck this trend is digital services. Now more than ever, it is clear that digital services have become critical to every 21st century economy.

# Quite literally, digital services are filling gaps when national or global emergencies interrupt more traditional modes of commerce.

# Digital services enable access to and delivery of a wide array of products across multiple sectors, from healthcare to retail distribution to financial services.

# Even in the midst of the COVID-19 pandemic, investments in digital services continue to flow at record levels globally, outpacing investment in nearly every other sector.

# India is an ideal destination for increased FDI flows in the digital services sector and offers undeniable potential for innovative homegrown start-ups not least because of its huge and increasingly digitised population.

# However, Indian government policies will be key determinants in how quickly and at what level the Indian economy attracts new investment, fosters Indian innovation, and expands its exporting prowess.

Three pending measures

# Currently, there are three pending reform measures under consideration that are likely to affect India’s growth trajectory in digital services for years to come —

1. the Personal Data Protection Bill (PDPB),

2. the e-commerce policy, and

3. the Information Technology Act Amendments.

# It may be difficult to reconcile these approaches with India’s strong interest in promoting data privacy, protecting its democratic institutions, and encouraging FDI and India’s position as a global leader in information technology.

# There is uncertainty about when these changes will be completed and implemented.

# Also, the course of the India-U.S. trade relationship is uncertain, as signs of progress are continually interrupted by setbacks in the form of new restrictions.

# The bilateral relationship is an important factor in realising the potential for greater trade and investment in digital services.

# The strategic relationship has been growing, reflecting how their historic ties have evolved over time.

# India and the U.S. are yet to conclude negotiation on a bilateral trade agreement that could address some digital services issues, and the U.S. just initiated a “Section 301” review of whether digital services taxes in 10 countries constitute “unfair” trade measures, including India’s equalisation levy.

# India will be host of the G20 nations in 2022, and it appears clear that post-COVID-19 international cooperation and approaches to good governance in the digital sphere will be top-priority initiatives. The steps India takes now could well establish itself as a true global leader.