With two of largest economies in the world — the European Union (EU) and China — developing their own digital economy frameworks and governance systems, and seeking to export those to their respective spheres of influence, the US and India risk being isolated.
With its comprehensive digital economy regulatory regime, including limits on cross-border data flows, onerous privacy rules and aggressive anti-trust enforcement directed at US internet companies, EU is seeking to export its digital governance model globally. China is doing the same.
China’s strategy of a protected domestic market, coupled with a State that is a massive provider of data to Chinese IT firms, is being exported through its digital Silk Road initiative.
If India and the US don’t want to live in an increasingly bipolar digital world — with some nations in the EU digital regulatory block and others as digital colonies of China — it is time for a high-level digital alliance between India and the US.
Today, the two countries are already partners in areas ranging from trade and investment, defence and counterterrorism, science and technology, and energy and health. Goods and services trade between the two countries topped $142 billion in 2018, with a joint resolve of taking it to $500 billion by 2024.
As India is a leader in IT services, fielding global leading companies like Wipro, Tata Consultancy Services (TCS) and Infosys, and the US is home to the world’s leading digital economy firms, becoming partners in digital is the next logical step.
However, increasingly, economic policy in the two countries is fuelled by ‘nation-first’ rhetoric. Such an approach has the potential of putting both countries at loggerheads.
For instance, India’s position on local storage of sensitive data of its citizens, particularly in payments, e-commerce and social media sectors, has raised the hackles of American companies, as have a series of restrictions against US firms from entering the ecommerce market.
Mutual Strengths Yet, apparent discord is no reason to weaken the resolve of deepening engagement in existing areas and expanding in others. In fact, such episodes must prompt a course correction through comprehensive review of causes, and designing of mechanisms to prevent and promptly resolve possible discords in future.
One key Indian position is primarily informed by the difficulty of its law enforcement agencies to get timely access to data of potential rogue elements that may be stored outside India.
Yet, rather than ban cross border data transfers to the US, a well-negotiated arrangement between the two countries that inter alia minimises restrictions on cross-border data flow, maintains high levels of data protection, and does not compromise the ability of GoI to access necessary data in genuine cases, will be a win-win situation for both countries.
Resolving these kinds of existing and potential disputes through formalised mechanisms like advance notification and structured consultation could go a long way in deepening the partnership.
However, the scope of digital alliance need not be limited to dispute resolution. The emerging new IT-based innovation wave is bringing stakeholders across jurisdictions closer than ever.
A range of intermediaries has emerged to increase convenience, safety, speed and economy of digital experience, within and across borders. Regulation on accountability, dominance, grievance redress and taxation in digital economy will need greater cooperation among governments than ever before.
India and the US can lead the way in working towards establishing best practices by entering into early engagements at senior government levels on these issues, under a broader digital alliance. The ongoing 2+2 dialogue on defence and security issues could be a good template.
The digital alliance can also benefit from close partnerships between industry and civil society of the two nations. Finally, each nation leads in certain areas, with India ahead of the US in programmes like smart cities and digital identity systems.
Also, India has taken important steps in fighting digital piracy, with the Delhi High Court’s recent decision that provides a new tool for rights-holders to better protect the creativity tied up in their copyright.
The US leads in broadband and progress to 5G and e-government. When it comes to these kinds of digital policy innovations, a formal partnership can help two-way learning and implementation with appropriate customisation.
India and the US are not only naturally placed to develop a shared global vision for digital economy, but they are also equally equipped to present an optimal alternative to the Chinese or EU approaches. The leadership in both countries needs to actively work towards achieving this before it’s too late.