Data localisation debate, trade top on Mike Pompeo's India visit agenda

India’s various data legislations, that have been opposed by the Unites States (US) digital majors, and the possibility of a mutual trade pact will be high on US Secretary of State Mike Pompeo’s agenda when he lands in New Delhi next week. 

The two-day visit, starting Tuesday (June 25), is getting attention from policymakers on both sides, as it will set the ground for the bilateral meet between Prime Minister Narendra Modi and US President Donald Trump later this month, on the sidelines of the G-20 summit in Osaka, Japan.

The government on Friday said former commerce minister Suresh Prabhu will be India’s Sherpa at the G-20 meet.

Pompeo’s second visit to India comes at a time when trade relations between the two nations are rocky, with salvos being fired on multiple policy issues, ranging from India’s tariffs on trade to US plans of reviewing its H1B visa programme.

The data debate

“India’s push to mandate the localisation of servers and force US-based tech multinationals to share consumer data with government agencies have been closely scrutinised by the US,” a senior diplomatic source said.

Companies like Google, Amazon and Facebook have repeatedly criticised the proposed data protection Bill, currently being drafted by the Ministry of Electronics and Information Technology. On the other hand, regulatory oversight and taxation issues in the Commerce and Industry Ministry’s proposed e-commerce policy have also been under fire from the US.

“While we continue to be open to suggestions, India will reiterate its position that domestic legislation, done in consultation with all stakeholders — foreign and domestic — is the government’s sole purview. Both the policies are geared towards helping Indian consumers and businesses flourish at a time when the digital boom in India is maturing," an external affairs ministry official said.

Both nations are also at loggerheads on myriad issues in the e-commerce sector.

In January, despite protests from major economies like India, 76 mostly developed nations agreed to initiate talks on a proposed global set of trade rules for e-commerce at the World Trade Organization. Pushed by the European Union (EU) and the US, the move has been supported by major conglomerates like Google and Facebook in India.

Tangled trade issues

Commerce Department officials said the US side has continued to push for a mutual trade deal, something India remains non-committal on. 

The package has been in the works for the past one year and trade officials have met as many as seven times to hammer out a deal that provides an amicable solution to grouses from both sides.

India is considering the dismantling of its current price cap regime for coronary stents with a trade margin policy, while it may also allow lower duties on import of certain information and communication technologies products such as high-end mobile phone and smartwatches from the US. 

“But repeated threats by Trump to put a ‘reciprocal tax’ on Indian exports to the US, that have also been mentioned by trade delegations from Washington DC, are putting 

a spanner in the works,” a senior commerce department official said.

Trade watchers have termed latest developments as a bubbling trade war between both nations.

Last week, after dragging its feet for almost a year, New Delhi imposed higher tariffs on 29 high-value US agricultural and industrial imports, by up to 50 per cent. These were in response to higher tariffs announced by the US on steel imports by 25 per cent and aluminium imports by 10 per cent last year.

The Trump Administration has also cut off India’s trade benefits under its Generalized System of Preferences Scheme that allowed zero-duty market access for goods, something New Delhi has decided to not contest.

It’s not clear if India will discuss the US concerns of China’s Huawei operating in India. But Pompeo’s meeting with External Affairs Minister Subrahmanyam Jaishankar may see the latter take up the government’s plan to buy S-400 surface-to-air missile systems from Russia. The US has said the deal can trigger sanctions under Washington DC’s Countering American Adversaries Through Sanctions Act.