Editorials/Opinions Analysis For UPSC 30 June 2023
- Concerns about India-American Digital Trade
- India and Egypt Improve Relations: A Closer Look
The main objections raised by American tech companies and the problems with India’s digital trade regulations.
GS Paper 2: Bilateral relations, GS Paper 3: Digital economy
Discuss the consequences and objections raised by foreign IT companies over India’s Digital Personal Data Protection Bill during discussions on digital trade between India and the U.S. (250 words)
Current state of technology trade between the US and India:
- The U.S. overtook China as India’s top trading partner in FY2023, with bilateral trade reaching $128.55 billion, an increase of 7.65%.
- This highlights the importance of their trade relationship as well as the strengthening economic links between the two nations.
- The sector of digital or technological services did not become a significant one in bilateral trade.
- Despite the enormous potential of the Indian online services market and the robust U.S. digital services export industry, cross-border digital trade encountered obstacles.
- In 2020, the United States and India had a $27 billion trade gap in digital services.
- The shortfall, despite overall trade growth, emphasises the need to resolve trade imbalances and improve digital sector coordination.
- The establishment of the Initiative on Critical and Emerging Technology (iCET), which focuses on fields like artificial intelligence, quantum computing, semiconductors, and wireless telecommunication, shows that both nations are committed to fostering cooperation and advancements in important technology sectors.
- A Memorandum of Understanding (MoU) between India and the U.S. launched the $2.75 billion Semiconductor Supply Chain and Innovation Partnership.
- The goal of this agreement is to support innovation and strengthen the semiconductor sector in both nations.
- To focus on the Open RAN network and research and development in 5G/6G technologies, Joint Task Forces were established. These task forces seek to foster cooperation, knowledge sharing, and technological improvements in these crucial areas.
- Efforts are being made to advance emerging technologies like quantum computing and artificial intelligence.
- The creation of the Quantum Coordination Mechanism and a collaborative fund for commercialising AI highlights the dedication to maximising the promise of cutting-edge technologies.
- Overall, despite the fact that commerce between India and the U.S. has grown significantly, there is still a need to further investigate and improve digital trade relationships, address trade imbalances, and promote cooperation in important technology industries for both parties’ mutual advantage.
Concerns Voiced by American Businesses:
- Policy Obstacles: Amazon, Google, Meta, Intel, and Yahoo are just a few of the 20 policy obstacles that the Computer & Communications Industry Association (CCIA), which represents these businesses, has identified, has listed as trade barriers with India. They contend that India’s protectionist policies skew the playing field against American digital service providers and in favour of domestic competitors.
- The equalisation levy, which levies taxes on digital services and has been expanded in India, has alarmed American tech companies. They contend that the charge results in double taxation, complicates the taxation system, and casts doubt on the constitutionality of the government and its compliance with international duties.
- IT Rules 2021: Foreign tech companies have deemed the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, to be troublesome. Social media intermediaries (SMIs) and platforms with a sizable user base, such as multiple U.S. businesses, must comply with the guidelines, which impose compliance requirements on them. Unreasonable compliance timelines, content take-down procedures, and the demand for local compliance officers have all drawn criticism.
- Data Protection Law: Foreign IT companies have praised the fresh draught of India’s Digital Personal Data Protection Bill while also expressing ongoing reservations. For businesses operating in India, the unresolved ambiguities surrounding cross-border data flows, compliance deadlines, and data localization standards are uncertain.
Critiques of the New Data Protection Law Draught
- Ambiguities in Cross-Border Data Flows and Compliance Timelines: Uncertainty is caused by a lack of defined regulations for cross-border data flows.
- Businesses are concerned when there are no clear deadlines for compliance.
- Data localization worries: The previous version enforced restrictions for data localization, which drew criticism.
- The new draught eliminates these clauses, but the absence of explicit instructions prompts concerns about de facto localisation.
- Impact on Operating expenses and Discrimination:
- Data localization rules may be perceived as discriminatory, limiting the capacity of international enterprises to store data outside of India.
- Such regulations may dramatically increase operating expenses, particularly for foreign companies.
- India’s Role as a Data Hub and worldwide repercussions:
- With a big population of internet users, India intends to become a hub for data processing;
- Policies on cross-border data flows would have worldwide repercussions, much like the GDPR’s effects.
- Justifications for Data Localization and Potential Drawbacks
- Governments offer numerous justifications for mandating data localization.
- However, these rules may result in higher expenses for businesses and may be seen as favouring domestic enterprises over foreign ones.
- These arguments emphasise the requirement for precise standards and fair policies with regard to international data flows, data localisation, and their possible effects on businesses and global data governance.
- Draught of the Telecom Act: The proposed Telecommunications Bill, 2022, has come under fire for its extensive regulatory reach. The definition of “telecommunication services” could include Over-the-top (OTT) communication services, which could expose different platforms to onerous duties such licencing restrictions, data access by the government, encryption requirements, and internet shutdowns.
Other Policy Barriers:
The CCIA mentions the “Digital Competition Act” plan and the imposition of anticipated taxes on important digital intermediaries as additional policy obstacles that could be put in the way of American tech companies. These issues are in addition to the ones raised above.
Despite bilateral initiatives between India and the U.S. to strengthen their tech collaboration, U.S. tech companies’ concerns about India’s digital laws emphasise the need for more discussion and resolution. To create an environment that is favourable for digital trade between the two countries, it will be essential to address these issues, provide equitable market access, and set clear and balanced laws.
With 12% of world trade passing through the Suez Canal, Egypt is a large West Asian nation with a vital geostrategic location. It has bilateral trade agreements with important countries in West Asia and Africa and acts as India’s gateway to Europe and Africa.
GS Paper 2 – International Relations
Examine the origins and development of India-Egypt relations throughout history, including significant turning points like the Friendship Treaty and their participation in the Non-Aligned Movement and South-South Cooperation. Examine the effect that these connections from the past have had on the bilateral ties that exist today between Egypt and India. (250 Words)
India and Egypt’s recent promotion to a Strategic Partnership represents a long-overdue action that recognises their historical links and boosts India’s engagement with the West Asia-North Africa (WANA) region. With agreements covering agriculture, archaeology and antiquities, and competition law, the two nations hope to increase collaboration in industries including green energy, pharmaceuticals, and defence.
Ancient Times: Historical Analysis of India-Egypt Relations
- Trade contacts between these historic civilizations along the Nile and Indus rivers are where India’s relationship with Egypt first began.
- During the Cold War, India and Egypt both shared the goal to avoid forming alliances with either the United States or the Soviet Union. The Non-Aligned Movement was established in 1955 by Jawaharlal Nehru of India and Gamal Abdel Nasser of Egypt. During the 1956 War, Nehru’s support for Egypt was so strong that he even threatened to have India leave the British Commonwealth.
- South-South Cooperation: Egypt and India were key players in the G-77 organisation and activities promoting “South-South Cooperation.”
South-South Cooperation: What is it?
- The level of development is used to categorise the nations of the world. As a result, there are developed and wealthy nations, developing nations, and lastly Least Developed Nations. Developing and Least Developed Countries (LDCs) are found in the Southern Hemisphere of the world, while developed nations are found in the Northern Hemisphere, if we look closely. This geographic feature has led scholars to refer to rich nations as the “North” and developing nations and LDCs as the “South.”
- As a result, South-South Cooperation or Dialogue is referred to as when developing nations or countries in the South work together in a variety of disciplines. The process of cooperation among emerging nations in the economy and other sectors is hence referred to as “South-South cooperation.” Developing nations currently advocate South-South Cooperation as a workable plan for their growth and development.
- On the other hand, North-South discourse refers to collaboration and communication between the developed North and the developing South. The Non-Aligned Movement has selected the South-South Cooperation as the fundamental tenet of its economic strategy to realise the objective of collective self-reliance among developing nations. Although the phrase South-South Cooperation first appeared in the 1970s, the concept has long been on the NAM’s agenda. It is also a cornerstone of India’s economic diplomacy with regard to LDCs and developing nations.
Bilateral Relations & Friendship Agreement:
- India and Egypt signed a historic Friendship Treaty in 1955, significantly solidifying their connection during the 1950s. Regular high-level meetings and engagements between the two countries have recently given these historically close bilateral ties fresh life.
- Trade & Commerce: India has long-standing business ties with Egypt in Africa. Based on the Most Favoured Nation provision, the India-Egypt Bilateral Trade Agreement has been in force since March 1978. Raw cotton, fertilisers, oil products, chemicals, leather, and iron goods are a few notable Egyptian exports to India. In addition to lentils, India also sends cotton yarn, sesame, coffee, spices, and tobacco to Egypt. India also sends Egypt mineral gasoline, auto parts, ships, boats, electrical equipment, and spare parts.
Possibilities Between Egypt and India:
- India has identified the Gulf region as a key player in the region due to its moderate stance on religion, strong ties with the UAE (United Arab Emirates), and Saudi Arabia (which has made significant investments in Egypt). India aims to combat religious extremism by supporting moderate countries in the region and promoting social reforms.
- With the Suez Canal, through which 12% of global trade passes, Egypt is strategically located, and India seeks to promote its regional objectives by strengthening bilateral ties with Egypt.
- More than 50 Indian companies have invested more than USD 3.15 billion in Egypt. Egypt is looking for investments in infrastructure, including metro projects in Cairo and Alexandria, a Suez Canal economic zone, a second Suez Canal channel, and a new administrative capital in a Cairo suburb.
Similar Socio-Economic Conditions
- Similar socioeconomic conditions exist in Egypt, a big country with a 378 billion USD economy and 105 million people. Egypt’s main imports include refined petroleum, wheat (the world’s top importer), vehicles, maize and pharmaceuticals, all of which India has the capacity to deliver.
- Construction of New Cairo (USD 58 billion), a nuclear power plant (USD 25 billion), and a high-speed rail network (USD 23 billion) are just a few of the 49 megaprojects on the Egyptian government’s ambitious agenda for infrastructure development.
- From 2015 to 2019, Egypt was the third-largest arms importer in the world. These offer India opportunities.
- Cooperation in the technical and scientific fields: The development of bilateral ties has been significantly aided by technical assistance and cooperation. The Indian Council of Agricultural Research (ICAR) and the Agricultural Research Centre of the Ministry of Agriculture & Land of Egypt signed an MoU for cooperation in agricultural research in 1998. Egyptian candidates participate in the Indian Technical and Economic Cooperation Programme (ITEC).
- India and Egypt share a number of cultural similarities, which led to the establishment of the Maulana Azad Centre for Indian Culture (MACIC) in Cairo in 1992. MACIC promotes Indian culture through hosting cultural events, teaching Hindi, Urdu, and yoga, and showing Indian films. The annual “India by the Nile” event, sponsored by the Egyptian Ministry of Culture and the Indian Council for Cultural Relations (ICCR), honours Indian traditional and modern performing and visual arts, cuisine, and popular culture in Egypt.
- A month-long air force exercise, a visit from the head of the Egyptian air force to India, and other events have all contributed to the restoration of the defence collaboration between Egypt and India.
Attitudes on the Ukraine War:
- India and Egypt have recently adopted attitudes on the Ukraine War that are similar to one another, abstaining from criticising Russia’s conduct while still advocating for a diplomatic settlement.
- India’s move to send wheat to Egypt, a big importer of wheat who was affected by Russian and Ukrainian export bans, was praised by Cairo and improved relations between the two nations.
- Egypt’s Highest State Honour: Prime Minister Narendra Modi received “The Order of The Nile,” Egypt’s highest state honour, during President El-Sisi’s visit to India as the chief guest for India’s Republic Day. This coveted prize honours individuals who have contributed significantly to Egypt or humanity.
India and Egypt are developing a tighter relationship that puts a priority on future economies and independent foreign policies, bolstered by their historical ties and inspired by present geopolitical factors.