With two of largest economies in the world – the EU and China – developing their own digital economy frameworks and governance systems and seeking to export those to their respective spheres of influence, America and India risk being isolated. With its comprehensive digital economy regulatory regime, including limits on cross border data flows, onerous privacy rules, and aggressive antitrust enforcement directed at U.S. internet companies, the EU is seeking to export its digital governance model globally. China is doing the same.
Its strategy of a protected domestic market, coupled with a state that is a massive provider of data to Chinese IT firms, being exported through its digital silk road initiative.
If India and the United States do not want to live in an increasingly bi-polar 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 United States.
Such a partnership makes eminent sense. Today, the two countries are already partners in areas ranging from trade and investment, defence and counter-terrorism, science and technology, and energy and health, among others. Goods and services trade between the two countries topped US$142bn in 2018 with a joint resolve of taking it to US$500bn by 2024.
As India is a leader in IT services, fielding global leading companies like WIPRO, TCS and Infosys, and the United States 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 fueled 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 U.S. firms from entering the e-commerce market.
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 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 United States, a well negotiated arrangement between the two countries which inter alia minimises restrictions on cross border data flow, maintains high levels of data protection, and does not compromise the ability of Indian government 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 formalized mechanisms like advance notification and structured consultation could go a long way in deepening partnership between the two nations.
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 United States 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 on-going 2+2 dialogue on defence and security issues between the two countries 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 United States in programs like smart cities and digital identity systems, both implemented under the Modi government. 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 that is tied up in their copyright.
The United States 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 customization.
Given their past and present partnership, India and the United States are not only naturally placed to develop a shared global vision for digital economy but are also equally equipped to present an optimal alternative to the Chinese or EU approaches. The time is right for a digital alliance between India and the United States. The leadership in both countries needs to realise this and actively work towards achieving the same before it’s too late.
Mehta is Founder Secretary General of CUTS International, a global economy policy research and advocacy group headquartered in India. Atkinson is Founder and President of Information Technology and Innovation Foundation, the world’s top think tank for science and technology policy, headquartered in the United States.