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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