What has been missed is India's digital sovereignty

The Hindu

a day ago

The India-United Kingdom Free Trade Agreement (FTA), called the Comprehensive Economic and Trade Agreement (CETA), has been lauded by the Union Commerce and Industry Minister, Piyush Goyal, as the 'gold standard' for all India's trade deals. Mr. Goyal has asserted that no compromise was made in any sensitive sector. Evidently, the Minister seemed to be counting only agriculture and labour-intensive manufacturing as sensitive sectors — which they are. But remarkably, despite the wide coverage the FTA has received, the impact on India's other, highly sensitive digital sector, which permeates every sphere of national activity and holds the key to our future, has gone without official comment or media scrutiny.
We argue that the compromises made in the digital sector through the India-U.K. FTA have profound consequences for India's digital sovereignty — a term frequently invoked in high-level political discourse. India has completely flipped on several core positions that it has long maintained at global forums, including at the World Trade Organization (WTO).
Source code disclosure
The most surprising giveaway is on India's sovereign right to seek ex ante access to the source code for foreign digital goods or services, even for those deemed sensitive. This is very different from getting source code ex post for a specific investigation or remedy, which is allowed under the agreement. Regulators in different sectors often have strict disclosure rules, such as for food and medicine ingredients. Software now permeates nearly every product, including telecom, Artificial Intelligence (AI) and health applications, whereby it may be crucial for the regulators to be able to 'look under the hood' of software, for safety, security and general compliance requirements, and to enable urgent, real-time upgrades.
Giving up this right is a 180-degree turn from India's steadfast stand at the WTO and other forums. Even the United States, which first included source code related prohibitions in its FTAs and at the WTO, withdrew this formulation last year, recognising its domestic regulatory, law enforcement and security imperatives. In the U.S. driven Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the 'source code disclosure' provision applied only to mass-market software such as Microsoft's operating systems — meaning not to niche and custom-made software. It specifically excluded software for critical infrastructure. In the U.K. FTA text, the prohibition applies to all software. Businesses are always free to enter, or avoid, transactions requiring disclosure of source code. What is sacrificed here are India's regulatory rights in this regard, for all times to come, in a sector that has just begun to take shape.
Surrendering a critical national resource
Granting equal and non-discriminatory access for U.K. parties to 'Open Government Data' — a term from the pre-digital era which then meant government transparency, and access to its statistics — constitutes another major giveaway. This is because data is not what it used to be. Today, it has acquired an entirely new avatar, being the digital era's most valuable resource. AI, where heated competition for global mastery is raging, is but patterns derived from data, which is why data is deemed to be priceless.
This concession is very significant, even though this provision is yet at a 'best endeavour' level, and non-binding. It is incomprehensible why India (where the intention to be an AI superpower is a staple of top-level political rhetoric), has conceded that national data held by the government is not a sovereign resource but an international free for all. Facilitating foreign access to such data poses risks of eroding India's competitive advantage in using India's own data to create Indian AI products, and also serious security risks as national data can be weaponised.
The most contested issues in digital trade are the 'free flow of data' and 'data localisation'. While India seems to have largely stood its ground on these issues, its commitment to 'enter into consultations to extend appropriate equivalent disciplines' to the U.K. if India agrees to any concessions with another country, denotes a dangerous regress, and visible vulnerability, with regard to India's long-held positions on these key issues.
This matter links to the one above on India's data being an important national economic resource as well as the need to safeguard it from a security point of view. Again, last year, owing to similar considerations, the U.S., the original proponent of 'free flow of data' and 'prohibition on data localisation', withdrew from these stances at the WTO.
It is difficult to understand how Indian negotiators could be so naive or negligent in agreeing to the above concessions. Digital trade concessions are not like those on commodities, where tariffs can be applied one day and removed on another.
Digital trade texts are essentially about rule making for a new global digital order. We either fully opt into western, Big Tech-oriented, digital architectures, or we maintain sufficient autonomy and sovereignty. This is because once the digital rules and systems are set, they are almost impossible to roll back. India's digital concessions are thus buttressing a set of rules for a global digital ecosystem from which India cannot extricate itself later. And India is doing all this in a reactive mode without a clear road map of its own.
It seems that the U.K. was able to extract all the above concessions, the absolute opposite to what India has stood for till now, because, unlike manufacturing and agriculture, there is no specific political 'constituency' for digital sovereignty. But it is perhaps an even more important issue in the mid to long term. We may be seeing a repeat of how India lost out on early industrialisation and had to suffer grievous colonial exploitation, causing a loss of wealth and independence. In making these digital concessions, we may be giving up our digital future, independence and prosperity.
India must act quickly
India needs to develop and negotiate towards a global digital architecture that protects and furthers its digital sovereignty. As a late starter in 'digital industrialisation', it should create the space required for India to become a digital superpower and not a digital colony.
For this, India needs to urgently formulate a full-fledged digital sovereignty and 'digital industrialisation' policy which should then inform and guide its trade negotiations. Our negotiators must be accompanied by digital sovereignty experts with access to the top political leadership, which has the core responsibility for safeguarding India's long-term digital interests. These interests are often not so visible, and, therefore, tend to get by-passed and not fought for.
Smita Purushottam is India's former Ambassador to Switzerland. Parminder Jeet Singh is a Delhi-based digital society researcher