Reforming India’s digital policy

GOVERNANCE/ ECONOMY/ INTERNATIONAL

Topic: General Studies 2,3:

• Government policies and interventions for development in various sectors
• Indian Economy and issues relating to planning, mobilization, of resources 
• Effect of policies and politics of developed and developing countries on India’s interests 

Reforming India’s digital policy

Context: With COVID-19 continuing to extend its reach globally, economic growth has plunged and nations are taking measures to reverse recessionary trends. One sector that is expected to buck this trend is digital services.

Do You Know?

• The United Nations Conference on Trade and Development in its latest World Investment Report projected that FDI to developing Asian economies could drop by as much as 45%.
• India will be host of the G20 nations in 2022, and in post-COVID-19 world, international cooperation and good governance in the digital sphere will be in top-priority agenda.

Why Digital Services has become crucial today?

• Multi-sectoral utility: Digital services enable access to and delivery of a wide array of products across multiple sectors, from healthcare to retail distribution to financial services.
• Critical for growth: Digital Services have become critical to every 21st century economy given that the world is at the doorstep of fourth Industrial revolution
• Resisting the negative trends: 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. 
• Helpful during Emergencies: Digital services are filling gaps when national or global emergencies interrupt more traditional modes of commerce. Ex: Telemedicine during COVID-19 lockdown
• Opportunity for India: India is an ideal destination for increased FDI flow because of its huge and increasingly digitised population along with good start-up ecosystem

What are the challenges in India that prevent full exploitation of its potential in digital services?

Along with need for bridging digital divide & improving digital infrastructure, below are some of the areas which need attention from government

1. Three pending measures in digital services

• The Personal Data Protection Bill (PDPB)
• The e-commerce policy
• The Information Technology Act Amendments

2. Contesting approaches & goals

• Approaches in the above regulatory reform seem to emphasise on protecting the domestic market for domestic companies and prioritising government access to data
• It may be difficult to reconcile these approaches with India’s strong interest in promoting data privacy, protecting its democratic institutions, and encouraging FDI. 

3. Challenges in Indo-US bilateral relationship

• India and the U.S. are yet to conclude negotiation on a bilateral trade agreement that could address some digital services issues
• U.S. has initiated a Section 301 review of whether digital services taxes like India’s equalisation levy constitute “unfair” trade measures.
• Strong relationship with US is an important factor in realising the potential for greater trade and investment in digital services. 

Conclusion:

India needs to attract FDI and address the obstacles preventing the growth of digital services, so as to achieve the goal of becoming a $5 trillion economy