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ITI submissions: what are the policy barriers faced by US tech businesses in India?

In its submission to a USTR consultation, it highlighted concerns on “India’s restricitve data policies” creating trade barriers for tech companies

“ITI remains concerned with India’s restrictive data policies, which have and will continue to generate trade barriers for U.S. companies,” read the submission by the Information Technology Industry Council (ITI) to the Office of the United States Trade Representative (USTR) consultation for its 2023 National Trade Estimate report.

“India has an opportunity to showcase progress on some of its more restrictive policies when it hosts the G20 in 2023,” the asociation noted in its submission.

What is the ITI: It is a global tech trade association founded in 1916 which counts several American companies as its members. The membership roster includes Adobe, Accenture, Meta, Microsoft, Amazon, Apple, Cisco, Dell, Samsung, Zoom, among others.

Why it matters: The submission is notable as it highlights the concerns of American companies with a sizeable presence in the Indian internet space. It conveys that the companies are not entirely happy with the direction being taken by the Indian government with regard to tech policy.

  • It is a timely reminder that the Union government may have to rework drafts of the data protection bill and telecom bill given the extent of concerns raised by several stakeholders.

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What are the “barriers”: The association highlighted several provisions in various Indian laws which could end up imposing trade barriers for these companies. Here are some of their concerns:

  • Telecom Bill: The document pointed out that expanding the scope of the definition of telecommunications services to include all internet-based communications services, OTT communications services, etc., could subject “these businesses to additional compliance burdens and in many cases to overlapping regulations”.
    • It said that the draft text definition of “telecommunications services” is extremely broad, which includes broadcasting, e-mail, voice mail, voice, video and data communication services, audiotext services, among several others.
    • It suggested that many of these businesses are already regulated through India’s Information Technology Act, 2000.
    • “The addition of a fresh and potentially duplicative set of potential licensing/registration requirements may prevent these companies from bringing world-class services to India consumers, potentially change their business models, and hamper bringing fresh investments in India,” read the submission reviewed by Medianama.
    • The association urged USTR to call upon the Indian government, especially the Department of Telecommunications (DoT).
    • Concerns raised by other bodies: It is not the only industry body to raise issues with the telecom bill recently such as—
      • GNI’s concerns: A submission by the Global Network Initiative (GNI) on the bill raised several concerns arguing that the bill will undermine freedom of expression and privacy online. It is a multi-stakeholder initiative which includes companies like Google, Cloudflare, Microsoft, among its members.
      • Asia Internet Coalition (AIC): The body asked the government to have separate laws for OTT platforms and telecommunication service providers (TSPs) in its comments.  AIC is an industry body whose members include the likes of Meta, Twitter, and LinkedIn. The coalition wrote that the draft bill poses a risk that regulatory interventions will undermine competition, entrench incumbent services, and reduce consumer choice.
  • IT Rules, 2021: The association was concerned about the lack of stakeholder engagement during the drafting of the guidelines. It said that it contains many “troubling elements” that could “undermine privacy, security, and freedoms of speech and expression”.
    • It was also worried about whether these guidelines force companies to localise their operations and restrict market access for non-Indian companies by imposing burdensome regulations.
    • They charge that these requirements erode safe harbour protections in the IT Act 2000 and overstep international best practices.
  • Data protection bill: The association welcomed Government of India’s (GOI’s) move to withdraw the data protection bill in August 2022, terming it “noteworthy”. It urged the government to protect the privacy of citizens in the “least trade-restrictive manner”.
    • It also asked the state to refrain from walling off foreign companies’ access to the Indian market or limit their operating space within India.
    • These comments were submitted when the new draft of the Digital Personal Data Protection Bill, 2022 was not  released, which must be the reason why the ITI did not share its comments on the new iteration in the present document.
  • E-commerce policy: The submission called the 2019 draft of India’s e-commerce policy as “discriminatory” and expressed concerns over media reports on the work being done on the revised draft of the policy. It highlights that:
    • The association wondered how a requirement for every e-commerce entity to register itself with the Department for Promotion of Industry and Internal Trade (DPIIT) will guard against unfair trade practices by e-commerce entities.
    • “It would also create an arbitrary and artificial distinction between offline sellers and e-commerce entities as registration requirements do not apply to offline sellers,” read the submission.
    • “Such additional non-tariff barriers have a dampening impact on the market access of foreign players into the Indian e-commerce market and significantly affect cross-border flows of data,” the submission concluded.
    • It noted that it does not expect DPIIT to release a revised draft in the near future but said that the association will “remain vigilant”.
  • Geospatial guidelines: The submission said that the Indian government’s new guidelines on geospatial data and associated services contain elements that are “discriminatory to foreign service providers”. It pointed out the following provisions as problematic:
    • It had an issue with the requirement stipulating that only Indian companies can access geospatial data and develop geospatial services in India because the guidelines prohibit foreign entities from owning geospatial data finer than a certain spatial accuracy threshold.
    • They also said that foreign entities can obtain a licence for the data through an Indian entity but they can only use it to serve Indian users, adding that “subsequent reuse and resale of such maps/data is prohibited”.
    • A localization requirement for data, which has to be stored and processed on a domestic cloud or on servers physically located in India.
  • Cloud services: The submission said that recommendations proposed by the Telecom Regulatory Authority of India (TRAI) on a regulatory framework for cloud services providers (CSPs) create an unnecessary barrier to trade by placing restrictions on CSPs’ operations.
    • “In the medium-to-long term, they also pose a risk of “nationalising” CSPs by granting them “critical infrastructure” status,” read the submission.

This post is released under a CC-BY-SA 4.0 license. Please feel free to republish on your site, with attribution and a link. Adaptation and rewriting, though allowed, should be true to the original.

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Written By

I cover several beats such as Crypto, Telecom, and OTT at MediaNama. I can be found loitering at my local theatre when I am off work consuming movies by the dozen.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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