India-U.S. Technology Trade Status UPSC NOTE


  • The U.S. is India's largest trading partner in FY2023, but digital services have not been prominent in bilateral trade.

  • The U.S. experienced a $27 billion deficit in trade in digital services with India in 2020.

  • Efforts are being made to strengthen the tech partnership through initiatives like the Initiative on Critical and Emerging Technology (iCET).

Concerns Raised by U.S. Tech Firms

  • The Computer & Communications Industry Association (CCIA) flags "significant imbalance" and "misalignment" in the U.S.-India economic relationship.

  • U.S. tech firms face discriminatory regulations and policies favoring domestic players in India.

  • Concerns include preferential treatment to Indian companies, government censorship, and challenges for U.S. companies operating in India.

Taxation Measures of Concern

  • U.S. tech firms criticize India's expanded equalisation levy on digital services, leading to double taxation and complexity.

  • The Equalisation Levy 2.0 imposes a 2% tax on non-resident e-commerce operators providing services to Indian residents.

  • Constitutional validity and compliance with international obligations have been questioned.

Issues with India's IT Rules 2021

  • Foreign tech firms raise concerns about the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.

  • Compliance burden and content takedown protocols are deemed impractical.

  • Grievance Appellate Committees receive criticism for their power to reverse content-related decisions.

Data Protection Law Draft Concerns

  • U.S. tech firms appreciate improvements in India's Digital Personal Data Protection Bill but point out remaining ambiguities.

  • Cross-border data flows, compliance timelines, and data localization are key concerns.

  • Requirements for data localization can increase operating costs and be seen as discriminatory.

Impact of Telecom Bill

  • The draft Telecommunications Bill, 2022 expands the regulatory scope beyond telephony and broadband services.

  • Over-the-top (OTT) communication services would be subjected to onerous obligations.

  • The law proposes a first-of-its-kind global authorization/licensing requirement for digital firms.

Other Policy Barriers

  • The proposal of a "Digital Competition Act" aims to address anti-competitive practices by big tech companies.

  • Estimated taxes for significant digital intermediaries are seen as targeting U.S. tech companies.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: India-U.S. Technology Trade Status UPSC NOTE
India-U.S. Technology Trade Status UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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