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US Trade Representative cites Indian data localization, equalization levy in report

US Trade Representative Katherine Tai

In a report on global trade barriers in 2021, the Office of the United States Trade Representative (USTR) cited data localisation and the 2% equalisation levy in a section on India. The 23 page section is a snapshot of all trade barriers between India and the US, compiled largely with the inputs of the US's diplomatic missions in the country. The report mostly covers developments in 2020, and the new Intermediary Rules are not covered; an earlier draft of the Rules is discussed, though. Here are the key digital trade barriers cited by the report. All emphasis has been added by us. Localization of data a barrier to US companies: "India has recently proposed and promulgated a number of data localization requirements that would serve as significant barriers to digital trade between the United States and India," the report said. "These requirements raise costs for service suppliers that store and process personal information outside India by forcing the construction or use of unnecessary, redundant local data centers. For smaller foreign firms that cannot afford redundant computing facilities within India, these requirements could serve as a total market access barrier." (The report is referring to the data mirroring provision for sensitive personal data in the Personal Data Protection Bill, 2019, and the RBI's guidelines in the same year requiring this for payments data. E-commerce policy problematic: "India is currently developing a new electronic commerce policy, early drafts of which have contemplated broad-based data localization requirements and restrictions on cross-border data flows, expanded grounds…

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