US tech companies are bracing themselves for an onslaught in India that could change the way they do business in the South Asian nation.
On Saturday, India opted out of trade talks with a US-led group of Asian nations, the benefits of which are unclear over trade commitments related to the environment, energy and digital trade. It added that it is in the process of strengthening its own digital framework and laws, especially regarding privacy and data. In doing so, India became the only participant in the 14-member Indo-Pacific Economic Framework that did not sign on to the group’s trade track.
India’s strong push for digital trade is a sign of how the country of 1.4 billion wants to take responsibility for foreign internet and technology companies operating within its borders. In the next several months, India could see a new privacy bill, a new Digital India Act replacing the antiquated Information Technology Act, and a revamped competition law seeking broader powers over global tech companies’ acquisitions. .
With the IPEF, the US seeks to expand its political and economic leadership in the Indo-Pacific region. While the Biden administration is eager to reach out to India to balance China’s growing influence, the new tariffs could strain relations between New Delhi and Washington. US tech companies Twitter and meta platform WhatsApp have been sued by the government over privacy violations and censorship. Google-parent Alphabet and Amazon.com are being investigated by India’s antitrust authority.
India passed a privacy law in parliament in August that introduced stricter rules on cross-border data flows, treated social media companies as publishers and empowered the Indian government to seek user data from companies. It alarmed big tech companies who worried that India could become a global model. Details of the upcoming new bill are not yet known, but it may not be very friendly to US tech companies.
India’s approach to US technology is in line with what many countries around the world are recommending, but it has a new confidence born from being the world’s second largest internet market in terms of users after China. The country’s digital market has exploded in recent years thanks to cheap data and the rise of smartphones – making it a key market for tech giants around the world. Adding to its significance is the fact that China’s Internet market will continue to be more open and globally connected, even after the new regulations.
Foreign companies had better start adapting. The number of Internet users in India is estimated at 640 million by Bain & Company—almost twice the population of the United States, which is almost certainly influenced by this amount.
Write to Megha Mandavia at megha.mandavia@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
