India -U.S. initiatives on Critical and Emerging Technology

(MainsGS2:Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.)

Context:

The U.S. and India are poised to lead in clean energy transformation, shore up and diversify global semi-conductor supply chains and supply chains in other critical goods, and lead the revolution in AI (Artificial Intelligence), advanced computing, biotech, and quantum computing.

Digital trade:

Digital trade is the area where some of the biggest U.S. tech companies have recently flagged multiple policy hurdles, including “India’s patently protectionist posture”.
Notably, in FY2023, the U.S. emerged as India’s biggest overall trading partner with a 7.65% increase in bilateral trade to $128.55 billion in 2022-23.
However, digital or technology services did not emerge as one of the sectors at the forefront of bilateral trade.
The Computer & Communications Industry Association (CCIA) points out in its report that “despite the strength of the U.S. digital services export sector and enormous growth potential of the online services market in India, the U.S. ran a $27 billion deficit in trade in digital services with India in 2020”.

Initiative on Critical and Emerging Technology (iCET):

The two countries have been ramping up their tech partnership through moves like the Initiative on Critical and Emerging Technology (iCET) announced by President Joe Biden and Prime Minister Narendra Modi last year.
Under the iCET, India and the U.S. agreed to cooperate on critical and emerging technologies in areas including artificial intelligence, quantum computing, semiconductors and wireless telecommunication.
Additionally, under the iCET, India and the U.S. also established a Strategic Trade Dialogue with a focus on addressing regulatory barriers and aligning export controls for smoother trade and “deeper cooperation” in critical areas.

Concerns of U.S. tech firms:

The CCIA, while appreciating the reinvigorated efforts to ramp up trade through bilateral initiatives, has flagged in its note, the “significant imbalance” and “misalignment” in the U.S.-India economic relationship.
It said that the Indian government has deployed a range of “tools to champion their protectionist industrial policy”, tilting the playing field away from U.S. digital service providers in favour of domestic players.
To describe these “discriminatory regulations and policies”, it cites the example of India’s guidelines on the sharing of geospatial data, which it accuses of providing preferential treatment to Indian companies.
It has also expressed discontent over India’s veering away from “longstanding democratic norms and values, and seeking greater government censorship and control over political speech”.

Concern over IT Rules:

The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, has been flagged by the consortium of foreign tech firms under some of the most “problematic policies”.
The IT Rules place compliance burden on social media intermediaries (SMIs) and platforms with five million registered users or more, which means several U.S. firms end up falling under the ambit.
Some points of concern raised are the “impractical compliance deadlines and content take-down” protocols and appointment of a local compliance officer.
SMIs are now obligated to remove, within 72 hours, information or a communication link in relation to the six stipulated prohibited categories of content as and when a complaint arises.
There is also major criticism against the government’s institution of the three-member Grievance Appellate Committees (GAC), which will hear user complaints about the decisions of SMIs regarding their content-related issues and have the power to reverse those decisions.

Conclusion:

India and the United States unveiled a roadmap for enhanced collaboration in high-technology areas, with a focus on addressing regulatory barriers and aligning export controls for smoother trade and “deeper cooperation” in critical areas.