| UPSC Relevance GS Paper II – Governance, International Relations .India’s negotiating strategy in FTAs .Impact of international trade on domestic sovereignty GS Paper III – Economy, Security Data as a strategic asset Cybersecurity and digital infrastructure AI policy and digital innovation Ethics, Essay Ethical implications of data sharing and digital inequality National vs. corporate control of digital assets |
Why in News?
India and the United Kingdom recently concluded negotiations on the Comprehensive Economic and Trade Agreement (CETA), hailed by the Union Commerce and Industry Minister as the “gold standard” for trade deals. While key sectors like agriculture and labour-intensive manufacturing were protected, experts have raised serious concerns about digital concessions made under the agreement — posing a threat to India’s digital sovereignty.
Background: What Is Digital Sovereignty?
Digital sovereignty means a country’s power to control and protect its digital systems — like data, software, and technology networks.
In today’s digital world, data is like a valuable resource, just like oil or water. So, controlling it is very important for a country’s security and independence.
It includes:
- Controlling how data moves across borders (cross-border data flow)
- Making foreign tech companies share their source code
- Building and regulating Artificial Intelligence (AI)
- Storing data within the country (data localisation)
For India, which wants to be a global digital leader, keeping control over its digital space is necessary for both economic growth and national security.
Key Concerns: What India May Have Given Up in the FTA
1.No Power to Check Software Source Code Before Use
- Earlier, India could ask to see the source code (the core instructions behind a software) before it was used — to check for safety and compliance.
- Under the new FTA, India can only access it after something goes wrong.
- This change reduces India’s ability to regulate sensitive software in areas like healthcare, telecom, or Artificial Intelligence.
- Even the U.S. has dropped such risky clauses in its new trade agreements due to security concerns.
Example: If an AI system in a hospital misbehaves, India can’t check the source code in advance to prevent such failures.
2.Free Access to Indian Government Data for U.K. Companies
- The FTA gives U.K. firms equal access to India’s Open Government Data.
- Earlier, this data meant basic public statistics, but now it includes valuable digital resources used to train AI models.
- This move, though non-binding for now, sets a dangerous example for future agreements.
Risks:
- Helps foreign companies build powerful AI using Indian data
- May lead to “data colonialism”, where India provides data, and foreign firms earn profits
- Could create security threats
3.Loss of Freedom to Make Data Rules in the Future
- India managed to protect some data localisation rights, but the FTA includes a “ratchet clause” (a rule in trade agreements that prevents a country from taking back or reversing a liberalisation measure once it’s granted — future policies can only become more open, not stricter).
- This means: If India gives any digital concession to another country in future, the same must be given to the U.K. automatically.
- This reduces India’s flexibility in making strong digital laws and weakens its position in future global deals.
Note: Even powerful countries like the U.S. now support keeping data inside the country, seeing it as important for security and economy.
Strategic Implications: Why It Matters
- Digital trade rules (laws that govern how countries exchange digital services and data) are not easily reversible — unlike changing taxes or tariffs on physical goods.
- Once India joins a global digital system, it will be legally bound by those rules for a long time.
- These rules will influence how the world’s digital economy works for decades.
👉 So, India must choose —
Will it be a rule-maker (setting the terms of global digital trade)
or a rule-taker (accepting rules made by others)?
What Happens If India Doesn’t Act?
If India doesn’t build a strong, unified digital strategy, it could face serious consequences:
- Become a digital colony (a situation where foreign companies control or exploit a country’s digital resources, like data and tech platforms)
- Lose the chance to create economic value from its own data and digital innovations
- Lose cybersecurity control and become more vulnerable to foreign surveillance or tech manipulation
- Lose geopolitical influence in global digital negotiations
Way Forward: Securing India’s Digital Future
To protect its digital independence, India must act with clarity and coordination. Here’s what can be done:
1. Create a National Digital Sovereignty Policy
- Clearly define what digital rights and protections are non-negotiable (e.g. data ownership, privacy, source code access).
- Ensure that all key ministries — Commerce, IT, Defence, and External Affairs — are working together under a common framework.
2. Include Technology Experts in Trade Talks
- India’s trade negotiations often lack digital know-how.
- Teams must include tech experts, digital economy specialists, and cybersecurity advisors to avoid strategic mistakes.
- High-level political oversight is needed to ensure that long-term national interests are not compromised for short-term trade gains.
3. Promote Digital Industrialisation
- Build domestic data centres and digital infrastructure to reduce foreign dependency.
- Support home-grown Artificial Intelligence (AI) systems and use open-source software to encourage innovation.
- Offer incentives for storing data within India (data localisation) and promote indigenous platforms to compete globally.
4. Build Strategic Global Partnerships
- Collaborate with like-minded nations (such as BRICS and the Global South) to develop fair digital rules.
- Work towards creating global governance systems that respect national interests and prevent digital exploitation.
Conclusion
In the race to deepen economic ties through trade, India must be cautious not to barter away its digital future. The India-U.K. FTA reveals how the absence of a robust digital policy can lead to strategic concessions with long-term consequences. As the digital world evolves into the new battlefield of power, India must not repeat the colonial-era mistake of surrendering control over critical resources — this time, data and algorithms.
UPSC MAINS PYQ
Q. “Data localization has been a contentious issue in recent years. Critically examine India’s stance on data localization vis-à-vis global data flow.”(2023)
UPSC MAINS PRACTICE QUESTION
“Data is the new oil, but without data sovereignty, it may become a lost national resource.” Evaluate India’s position on data localisation and its implications in the context of recent FTAs.(Answer in 250 words)
NOTE- FOR MORE INDIA -UK FTA ALSO VISIT THE ARTICLE OF ,25TH JULY India-U.K. Free Trade Agreement: A Challenge to Public Health Security
SOURCE- THE HINDU
Found this helpful?
Bookmark for revision, Practice the mains question, and
Share with fellow aspirants! THANK YOU