Mentor’s Comment:  The India–UK FTA, recently finalised, is hailed as a “gold standard” but raises concerns over digital sovereignty. India conceded access to source code and government data, weakening regulatory control and AI innovation leverage. The deal also marks a shift from India’s previous global stand on data localisation, contrasting positions taken even by countries like the US.

Today’s editorial analyses the concerns over digital sovereignty in the India-UK FTA. This topic is important for GS Paper II (International Relations) in the UPSC mains exam.

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Let’s learn!

Why in the News?

The India–United Kingdom Free Trade Agreement (FTA), officially called the Comprehensive Economic and Trade Agreement (CETA), is in the news because of a significant debate over its provisions for the digital sector and digital sovereignty.

What digital issues arise from the India-UK FTA?

• Unrestricted Use of Public Data: UK firms gain equal access to Indian public datasets, affecting domestic innovation potential. Eg: British companies can commercially exploit Indian transport or agricultural data.
• Weakened Data Localization Autonomy: India must engage in consultations before enacting data rules, reducing flexibility.  
• No Safeguards for Critical Infrastructure: The deal doesn’t exempt sensitive sectors from source code restrictions. Eg: India can’t review software running in strategic areas like nuclear power plants.
• Lack of Coherent Digital Trade Policy: Commitments were made without a clear digital governance framework. Eg: Digital clauses went unchallenged, unlike the agricultural sector, which had strong negotiation backing.
• Restricted Source Code Access: India is barred from demanding source code or algorithms, limiting oversight.

How does source code access loss affect India’s digital control?

• Weakens Cyber Sovereignty: Without access to source code, India cannot verify or modify software behavior, increasing reliance on foreign tech. Foreign telecom equipment may have backdoors compromising national security.
•  Inhibits Regulatory Oversight: Lack of access hinders the ability of Indian regulators to audit algorithms or ensure compliance with local laws. Eg: India can’t fully inspect e-commerce platforms’ pricing algorithms for anti-competitive behavior.
• Compromises Data Privacy & Security: Source code opacity prevents India from detecting data leaks or unauthorized data transfers.

Why is a digital policy crucial for India’s trade interests?

• Ensures Data Sovereignty: A strong policy helps India control how data is stored and used globally. Eg: Prevents sensitive health data from being transferred without oversight.
• Protects Domestic Industry: Clear rules support Indian startups against unfair access by global players. Eg: Limits foreign firms from exploiting local e-commerce data.
• Strengthens Negotiation Power: Defined digital laws give India leverage in FTA talks. Eg: Helps resist pressure to allow free cross-border data flow in trade deals.
• Secures National Interests: Policy enables checks on cybersecurity threats and foreign surveillance. Eg: Restricts flow of defence-related digital information.
• Boosts Digital Economy: Promotes data-driven innovation and economic growth through regulation. Eg: Encourages investment in Indian cloud services by assuring legal clarity.

Way forward: 

• Reassess Digital Commitments: Review FTA clauses that compromise digital sovereignty and seek renegotiation if needed.
• Strengthen Data Protection Laws: Enforce robust data localisation and privacy regulations to safeguard national interest.
• Ensure Source Code Access: Mandate conditional access to critical software for security audits and public interest.
• Promote Indigenous Tech: Invest in local AI and digital infrastructure to reduce foreign dependency.
• Align Trade with Policy: Harmonise trade agreements with India’s long-term digital and strategic goals.

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