The global digital economy is growing faster than the speed of the Internet, and most companies struggle to stay ahead of the curve. Governments also strive to advance domestic benefits from the global digital ecosystem. India has long been seen as a technological powerhouse based on the scale of its human capital, its leadership in the outsourcing sector, and more recently, as a creator and innovator of advanced products, services and solutions. India’s latest Draft National E-Commerce Policy, however, undermines India’s leading place in the global digital economy. The Policy outlines an untested, counterproductive, and burdensome approach to the regulation of data-driven services, e-commerce marketplaces, and other digital products that are necessary for the very success of Digital India and which bring obvious benefits to the citizens of the nation.
The Policy will undermine India’s ambition to grow its digital economy to $1 trillion digital economy by 2025. By mandating data localization, the policy will erect a partition between India and the rest of the world, creating geographic and regulatory barriers in the digital realm. It will halt the movement of data that enables Indian companies and entrepreneurs to efficiently use global data infrastructure and will raise costs, reduce access to foreign markets, and limit choices for Indian citizens and businesses. Given the success of India’s IT outsourcing sector, the Policy is highly shortsighted. India benefits from the free flow of data—from collecting and processing a vast amount of data on foreign citizens—and rather than abet data localization, India should instead champion open digital markets. India’s IT sector would suffer greatly if its trading partners adopted the same measures included in the Draft Policy.
USIBC respects and supports the Government of India’s desire to develop Indian intellectual property, and therefore, is supportive of some aspects of the policy, but weary of many of the other digital provisions. Therefore, we encourage the Government of India to conduct thorough and open consultation of the regulatory environment around the narrow issues of e-commerce by focusing on attracting global capital and driving innovation.
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