The development of the Internet and digital technologies has followed a largely laissez-faire approach, with minimal government intervention and regulation. Such an approach not only allowed for innovation and the rapid development of these technologies, but also facilitated the creation of a global and interconnected digital framework. This framework has played a crucial role in the move towards a globalised world in which communications and transactions could take place seamlessly across borders.  

However, the increasing number of commercial applications of the Internet and technology has brought to the fore a host of concerns with its laissez-faire growth. The first is the inequitable distribution of benefits accrued as a result of digitisation. First world nations, which pioneered several digital technologies, have been the primary beneficiaries of their applications and use. Moreover, individuals and corporations based out of these nations have come to dominate the digital landscape and assume disproportionately important roles in global policymaking for technology. Developed and developing nations are increasingly aware of this skewed distribution of benefits and are taking measures to promote their own domestic industries. China is perhaps the most well known example of such an inward looking approach to technology development. It has continuously promoted domestic champions in the technology sector, often at the cost of foreign investment: the most recent example being its proposed rules that bar domestic ed-tech start-ups from raising any capital from foreign markets.

This chart depicts the wide variation in how countries have developed their ICT sectors, underlining the inequity that has arisen due to skewed digitisation. Source: India’s G20 Presidency: Promoting Trust and Inclusivity in a Digital World.

A second concern is the inability of the free market approach to engender adequate trust between nations that the data of their citizens will be adequately protected in the hands of foreign entities. The sale of data by corporations such as Facebook to entities like Cambridge Analytica is one example of the harms that nations are increasingly wary of. Moreover, law enforcement agencies are concerned that data pertaining to domestic activities which are stored abroad becomes inaccessible to them and hinders their ability to identify, prevent and remedy potential threats. Resultantly, more and more nations are mandating that data, particularly sensitive personal data, be stored locally. To address these concerns, there is a clear trend towards the assertion of digital sovereignty over digital technologies. The Indian government too has adopted digital sovereignty as a key tenet of its policy orientation as far as digital technologies are concerned.

Yet, while the assertion of digital sovereignty is inevitable to an extent, it threatens to splinter and fragment the global and interconnected nature of the Internet and digital technologies. In the long run, such fragmentation is likely to deepen the existing chasm between nations and significantly reduce the utility of digital technologies—only a concerted global effort can begin to address these splits. 

The G20 Summit, a key global forum for discussion, debate and action with regard to the governance of digital technologies, is one such arena that can enable collaboration. India is set to assume the G20 Presidency in 2023: it can use this position to balance its national interests with larger issues facing the digital ecosystem today, as well as to promote global trust and capacity building with regard to digital technologies.

But first, what is India’s stand on digital sovereignty?

Since the 1990s, India has advocated that developing nations must preserve policy space to frame laws and rules to govern digital entities. Take for instance its submissions to the WTO’s Work Programme on Electronic Commerce, a platform that facilitates discussions on the creation of a global e-commerce treaty. In its submissions, filed between 1995 up till the present, India has repeatedly maintained that it would be hesitant to agree on a binding global e-commerce treaty as it seeks to create a policy framework that helps its domestic entities, particularly micro, small, and medium enterprises (MSMEs), adopt digital solutions. This stance is based on the importance of MSMEs to the Indian economy. Even today, MSMEs, and not large corporations, form the backbone of the Indian economy contributing 29% to the country’s GDP. There are fears that the unrestrained entry of foreign multinationals, that already utilise digital technology, will negatively impact the competitiveness of small firms. Representatives of small and medium enterprises regularly cite the impact that firms such as Amazon and Flipkart have on traditional ‘kirana’ stores to buttress their argument. In keeping with this stance, India is now one of the few major economies that is not part of the Joint Statement Initiative on E-commerce, which is working towards finalising a global treaty on trade-related aspects of electronic commerce, in line with the call to action issued in Osaka.

The current Central government has also relied heavily on digital sovereignty as a pillar of its policy towards technology. This is reflected in a spate of recent regulations and orders that have been passed with the ostensible objective of protecting India’s national interests from foreign technology companies. For instance, the government banned more than 250 Chinese apps over the course of the last year. The bans, which were implemented under section 69A of the Information Technology Act, seek to protect the data of Indian citizens from being shared with the Chinese government via these apps. The government has also mandated localisation of various kinds of data under the Personal Data Protection Bill as well as other sectoral regulations, such as those passed by the Reserve Bank of India and Ministry of Health and Family Welfare. By requiring companies to store data locally, the government hopes to make it easier for law enforcement agencies to gain access to data for national security purposes. The recently passed IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 provide another example of India’s assertion of sovereignty over the digital spectrum. The Rules not only require intermediaries to appoint a host of officers to redress complaints from Indian citizens, but also require them to identify originators of messages or other content within India when required for national security and other purposes. 

While there is little doubt that nations will and should look to protect their national interest in the digital domain, it is questionable whether the approach adopted by India will yield the desired result. Consider the status of the digitalisation of MSMEs in India. Despite the Government’s vociferous arguments at the international fora that policy space must be retained to frame policies that spur digitalisation in this sector, little has changed on the ground. In fact, a previous report by the Esya Centre highlights that Indian businesses fare poorly when compared to other developing nations in Asia, such as Malaysia, Thailand, and Indonesia, on parameters that measure digital adoption.

Similarly, it is unclear at this stage whether the app bans in fact made data of Indian citizens more secure. This is because the government provided little justification for why these apps in particular were banned, other than their Chinese origin. Not only does this set a dangerous precedent where other nations may similarly place origin-based restrictions on Indian technology, but it also creates uncertainty for domestic enterprises in attracting foreign capital. 

Concerns also arise with the recent IT Rules. To identify the originator of messages, social media intermediaries may be required to provide backdoors in their end to end encryption. Previous literature on the topic has highlighted that any kind of backdoor in encryption can make it vulnerable to being compromised. The utility of data localisation in improving data access for law enforcement agencies has also not been clearly established in practice. Instead, mandating data localisation raises compliance costs which could impact the competitiveness of Indian entities vis-à-vis their foreign counterparts based in other countries. 

It would appear that India’s assertion of digital sovereignty has done little to actually improve the welfare of its citizens and domestic enterprises. Instead, it has been primarily geared towards securing narrowly defined national security objectives. By failing to consider trade and investment concerns in its assertion of digital sovereignty, India risks fragmenting itself from the global and interconnected framework of digital technologies. 

So, how can leading the G20 Summit further India’s interests?

The G20 Summit was first convened in 2008, amidst the global financial crisis. It emerged as a forum for interaction and unified action between finance ministers and central banks from the world’s 20 most important economies. Its interventions in the realm of finance helped pave the road to recovering from the crisis. Gradually, the mandate of the G20 expanded beyond just financial issues and covered pressing global issues, such as the environment, as well as labour and employment. 

More recently, the G20 has begun to focus on the creation of global frameworks for the governance of digital technologies. The importance of digital technologies in the G20 agenda is reflected by the fact that ministers responsible for the digital economy have met annually at the Digital Economy Ministerial Conference to discuss issues of digital innovation, employment generation, and the regulation of emerging technologies since 2017. Amidst the pandemic, under the presidencies of Saudi Arabia (2020) and Italy (2021), the convergence between healthcare and technology has become an area of focus at the G20. Some key recent initiatives in technology governance have been first proposed at the G20 before being taken up by other international organisations, such as the call for a concerted effort towards a global e-commerce treaty, which was raised at the Osaka Summit in 2019.

Some of the key Digital Technology related issues that have been discussed at the G20 Summit. Source: India’s G20 Presidency: Promoting Trust and Inclusivity in a Digital World.

Clearly, the G20 shapes how countries engage with technology—given the drawbacks of the current Indian approach to digital sovereignty, it is worthwhile considering what an alternative approach vis-a-vis the Summit would look like. The contours of such an approach are outlined in the Esya Centre’s report on a digital agenda for India’s upcoming G20 presidency. The report suggests that India should recalibrate its approach by focusing on the two key issues that plague global cooperation in technology, namely the skewed nature of benefits from digitalisation and a lack of trust in digital relations. 

What does a  nuanced approach to protecting national interests in the digital landscape look like?

To address the first concern, India should consider using its standing as a major developing economy to foster global collaboration in digital capacity building, particularly for developing nations. Indeed, as previously stated, India was one of the key proponents of the stance that developing nations must not rush into a global treaty on e-commerce. Its consistent articulation of this stand helped ensure that first world nations were unable to formalise such an agreement under the auspices of the World Trade Organization. At the same time, India must work towards ensuring that the stance it adopts is actually in line with the developing world in general. For example, while India continues to maintain distance from negotiations on an e-commerce treaty, other developing nations have already signed up to the Joint Initiative on E-Commerce. 

Evidently, there is scope to balance national interests with the broader interests of the developing world. Some avenues to do this include creating a platform for MSMEs to showcase and market their products and services, and partnering with other countries to implement digital projects, such as the laying of broadband cables or the development of Smart Cities. 

These initiatives will help reduce gaps in technical capacities between nations which will, in turn, improve the feasibility of global cooperation on technology issues in the medium to long term. 

In the short term, the focus must be on creating trust between nations with regard to the security of data flows. This can be achieved by adopting a bottom-up approach to data sharing, which initially focuses on critical sectors, such as health and data. Instead of a broad data sharing framework, sector-specific sharing will allow nations to assess the impacts of data sharing on the privacy of their citizens’ data as well as the competitive impact on domestic firms. India’s experience with domestic initiatives, such as the National Health Stack, should help frame the discussion around such a sector-specific approach. Trust can also be fostered by increasing familiarity between agencies and organisations that are required to collaborate with regard to data sharing. For instance, bringing together law enforcement officials, who are required to coordinate data sharing requests, for joint training programmes could build synergies in their actions. 

An inconsiderate assertion of digital sovereignty lacks the necessary nuance and threatens to ostracise India from the larger global digital framework. A nuanced approach that balances national interests with the benefits of global cooperation appears best suited to India’s aspiration of becoming a major digital power—a position that can be well articulated at the Summit. The government must, therefore, ensure that its efforts at digital regulation during its Presidency account not only for security and privacy considerations but also for international business, trade, and investment interests too.

Featured image: Former United States President Donald J. Trump participates in a bilateral meeting with India’s Prime Minister Narendra Modi at the G20 Summit, 2019, in Osaka, Japan; courtesy of Shealah Craighead via the Trump Whitehouse Archive.


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