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Ties face tough terrain: Why India should not bow down to US pressure on data localisation

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Indications are that the Indian government is willing to stand up to the pressures brought by the US administration to abandon the policy of data localisation.

Ties face tough terrain: Why India should not bow down to US pressure on data localisation
For decades, economic relations between India and the US have traversed on a rocky road, but seldom have the fundamentals of the relations experienced the kind of stress that it has in recent years, especially during the Trump Presidency. Clearly, the US administration is in great hurry to realise the personal goal of the President of the United States (Potus), namely, to ‘Make America Great Again’ (Maga). It is becoming increasingly clear that the administration is seeking to realise the goal of Maga by pushing the major economic partners to accept the terms and conditions that would allow America Inc to expand their footprints in their economies.
This is the context within which Wilber Ross’ pronouncements must be seen. It appears that the US commerce secretary is trying to use a ‘crowbar’ to pry open the Indian economy, an infamous quip that was used by Carla Hills, the United States Trade Representative, during the Uruguay Round negotiations. It should be surprising that the words used by the senior functionaries of the administration then and now sound similar, since the context within which they are being made are identical. In the late 1980s, as is being attempted now, the administration wants Government of India to amend its laws and policies, making them suitable for the American business interests. The question is, should this be the focus of the Indian government?
The main concern for countries like India is that the US administration’s push seeks to undermine the rule of law on two fronts. First, policies of the partner countries are being targeted: the best example of this is Potus’ labelling India as the “tariff king”. Secondly, the administration has shown scant respect for the multilateral framework of rules governing the global economy, especially those that have been meticulously put in place over the past seven decades, first through the General Agreement on Tariffs and Trade (Gatt) and through the World Trade Organisation (WTO) during the previous quarter of a century. Despite the fact that these rules were crafted by the US and its allies, the Trump administration has systematically challenged the WTO, simply because this organisation will not steadfastly stand by the interests of America Inc. Initiating unilateral actions against its partners, without taking recourse to WTO rules, is undoubtedly the most risky option that the administration has chosen to undermine the organisation, for this can have catastrophic consequences for an already fragile global economy.
There should not be any doubt that the policies of the Trump administration have only one outcome, bringing the global economy to the brink. The administration must, therefore, listen to its larger economic partners like India and understand the reasons why their policies have been designed in the way they have been done. Take for example, the case of management of data, where India has adopted the policy of data localisation and which the US Administration has outrightly rejected.
Data localisation has been seen as an imperative to protect safety and security of personal information and also for preventing misuse of data for a variety of reasons. Government of India has listened to the arguments provided in this respect and has taken the first steps towards an effective data protection law. Safety and security of data is of prime importance for ensuring personal freedom in today’s increasingly inter-connected world.
There is a considerably larger context within which the role of data must be seen, and this is in area of economic governance. Data and information are the biggest assets in a market economy. Markets have not functioned the way textbooks have taught us since the biggest stumbling block is information asymmetry. This means that not all players operating in the marketplace have the same access to information, only the large players have the full information and insights about the market. Such a situation hurts small businesses, rendering them incapable of realising their legitimate benefits. One of the major lacunae that India suffers from is that data is not been leveraged by the government for the purposes of making appropriate interventions in favour of those whose interests are not been protected by the market forces, and also in the making of public policy. There seems to be some realisation now, as is evident from the draft e-commerce policy that the government is beginning to understand that data need to be used to further the interests of Indian enterprises.
Indications are that the Indian government is willing to stand up to the pressures brought by the US administration to abandon the policy of data localisation. If it does succeed, it would be only the second such instance when the government has, unhesitatingly, defended the country’s interest in the face of US pressures. Then, access to affordable medicines was protected by defending India’s patent law; now, fundamental rights of the citizens over the data they generate need to be defended.
Biswajit Dhar is a professor at Centre for Economic Studies and Planning,  School of Social Sciences, Jawaharlal Nehru University
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