India-US trade talks: DPDP Act, Information Technology rules dominate

Washington considers specific provisions in the DPDP rules and IT Rules non-tariff barriers for its companies

Deputy US Trade Representative (USTR) Rick Switzer-led American team, which was in New Delhi this week for trade talks, discussed with its Indian counterparts the executive rules under the Digital Personal Data Protection (DPDP) Act and the Information Technology Rules of 2021, sources told Business Standard.

 

During the meetings held on December 10-11 with Industry Minister Piyush Goyal, Commerce Secretary Rajesh Agrawal and India’s chief negotiator Darpan Jain, Washington flagged specific provisions in the DPDP rules and IT Rules that it considers non-tariff barriers for American companies.

 

One of these is the data localisation norms prescribed under the DPDP executive rules, which allow cross-border data transfers but says a government-appointed committee can, at any time, decide if particular types of data will no longer be allowed to be transferred or processed outside India.

 

Another issue raised relates to the strict compliance norms for social media and internet intermediaries under the IT Rules, 2021.

 

These rules require all such companies to appoint nodal officers for round-the-clock coordination with law enforcement agencies and to look into users’ grievances. Failure to comply with these obligations, along with provisions such as urgent content takedown, can attract fines and potential jail terms for employees.

 

“The US (side) feels that certain aspects of the digital personal data protection law are a non-tariff barrier for American companies,” a person aware of the matter told Business Standard.

 

It is learnt that the Indian side had made its offer during the October round of talks. Since then, the Indian side has maintained that most differences have been narrowed down and there is no need for a fresh round of negotiation.

 

The US team, on the other hand, has been insisting that agriculture-related market access, digital trade, and non-tariff barriers are some of the issues that still need to be sorted. That apart, some work of the legal text also needs to be fine-tuned.

 

Having missed the ‘Fall’ deadline, India is aiming to conclude the first tranche of the bilateral trade agreement (BTA) before the end of the calendar year. Yet, despite the latest round of meetings in New Delhi and a phone call between Prime Minister Narendra Modi and US President Donald Trump on Thursday, there is still no clarity regarding the finalisation of the deal.

 

On Thursday, Goyal said India is not negotiating the trade deal with a fixed deadline and that the US should sign on the dotted line if it is satisfied with India’s offer. He was responding to comments by USTR Jamieson Greer, who said Washington had received the “best-ever” offer from New Delhi, though India is resisting market access to certain farm items.

 

Commerce ministry sources said the visit by US trade officials offered both sides an opportunity for productive exchanges on a wide range of issues related to India-US trade and economic ties, including the ongoing negotiations for a mutually beneficial bilateral trade agreement. Both sides agreed to continue their purposeful and positive engagement, they added.