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Introduction

As the world’s power shifts from oil fields to data streams, India stands at a strategic crossroads. Digital trade rules shaped by global tech giants tempt short-term convenience but risk long-term dependency. The real challenge is safeguarding our digital future without surrendering our sovereignty.

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How digital trade agreements may constrain India’s indigenous digital capabilities

• Erosion of Regulatory Autonomy: Commitments against restricting foreign digital services can prevent India from implementing policies like data localisation and platform regulation.
• Barriers to Digital Industrial Policy: Clauses disallowing demands for source co
  Eg: Malaysia committed to not demanding source code or proprietary knowledge from US firms, an obligation India risks facing in similar FTAs.
• Revenue Loss from Digital Services: Restrictions on digital taxation reduce India’s ability to collect fair revenue from global tech players operating domestically.
• Dependence on Foreign Technology Stacks: Open access without reciprocal control creates deep reliance on US-based tech infrastructure, affecting sovereign AI and semiconductor development.
  Eg: US dominance over data and digital financial infrastructure like SWIFT threatens India’s decision-making autonomy.
• Weak Bargaining Power in Future Negotiations: Binding trade clauses may prevent India from promoting domestic platforms through procurement or regulatory preferences.
  Eg: Ongoing FTAs attempt clauses demanding India refrain from measures promoting domestic digital products.

Reforms needed to safeguard long-term national interests

• Strong Digital Sovereignty Laws: Ensure domestic legal supremacy over international commitments, especially in data protection, AI governance, and critical tech.
  Eg: Notification of the Digital Personal Data Protection Rules ensures domestic law prevails over external digital trade pressures.
• Strategic Digital Industrialisation: Promote indigenous cloud, semiconductors, and DPI-based ecosystems through targeted investments and procurement policies.
  Eg: Building on Digital Public Infrastructure (Aadhaar, India Stack) to support homegrown digital ecosystems against Big Tech dominance.
• Calibrated FTAs with Red Lines: Reject provisions curbing non-discriminatory regulation of Big Tech and preserve rights to data-related taxation and export control.
• Export Leverage of Skilled Digital Workforce: Use India’s software design expertise as a negotiation asset rather than conceding on sovereign policy space.
• Strengthening Cyber & Compute Infrastructure: Build sovereign compute stacks and secure digital networks to ensure national autonomy in a future data-driven economy.
  Eg: China’s sovereign compute stack shows how controlling hardware-to-cloud layers generates a $7 trillion digital economy.

Conclusion

Ensuring digital sovereignty is not just a policy preference but a national imperative. By protecting our regulatory space and nurturing homegrown tech strengths, India can secure high-value jobs, retain control over its data wealth, and emerge as a sovereign digital power in a rapidly shifting global order.

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