Reforming India’s digital policy

The United Nations Conference on Trade and Development has released its latest World Investment Report and projected that FDI to developing Asian economies could drop by as much as 45%.
However, even in the midst of the COVID-19 pandemic, investments in digital services continue to flow at record levels globally, outpacing investment in nearly every other sector.

Digital services have become critical to every 21st century economy.
Digital services are filling gaps when national or global emergencies interrupt more traditional modes of commerce.
Digital services enable access to and delivery of a wide array of products across multiple sectors, from healthcare to retail distribution to financial services.

India is an ideal destination for increased FDI flows in the digital services sector and offers undeniable potential for innovative homegrown start-ups because of its huge and increasingly digitised population.
However, Indian government policies will be key determinants in how quickly and at what level the Indian economy attracts new investment, fosters Indian innovation, and expands its exporting prowess.

1. Implementation of restructured pending reforms

Currently, there are three pending reform measures under consideration that are likely to affect India’s growth trajectory in digital services for years to come

- The Information Technology Act Amendments.
Approaches in these regulatory reform efforts seem to emphasise a focus on protecting the domestic market for domestic companies and prioritising government access to data.
It may be difficult to reconcile these approaches with India’s strong interest in promoting data privacy, protecting its democratic institutions, and encouraging FDI and India’s position as a global leader in information technology.

2. Conclude negotiations on Bilateral trade agreement

The course of the India-U.S. trade relationship is uncertain, as signs of progress are continually interrupted by setbacks in the form of new restrictions.
India and the U.S. are yet to conclude negotiation on a bilateral trade agreement that could address some digital services issues.

As India resumes its efforts to put into place a new architecture for digital services and as it pursues opportunities to attract new investment, the government and stakeholders might consider the full range of implications for the long-term.
India will be host of the G20 nations in 2022, and it appears clear that post-COVID-19 international cooperation and approaches to good governance in the digital sphere will be top-priority initiatives.
The steps India takes now could well establish itself as a true global leader.

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