The India-UK free trade pact: A new paradigm for digital spaces

It marks India's turn from defensive caution to strategic ambition as it seeks to shape global rules

- VIVAN SHARAN & AJAI GARG

On 6 May, India and the UK concluded a free trade agreement (FTA) that, for the first time, locks in enforceable digital-trade disciplines. The pact signals that New Delhi plans to help shape rather than react to the rules of the global digital economy.

How we got here: For two decades, India avoided binding commitments in services and advanced technology markets. Protection of domestic regulatory space kept us outside the WTO's plurilateral Trade in Services Agreement and the second Information Technology Agreement. That caution let India nurture its export-oriented information technology (IT) services, while retaining industrial-policy levers such as today's performance-linked incentives for smartphones.

The burgeoning digital market, however, has precipitated a shift. Apps, devices and network infrastructure now grow faster than traditional IT services. During the data protection rule-making process, thousands of submissions were made, mostly from small app developers and cross-sector associations rather than the IT services lobby. Such a broad constituency merits predictable digital economy regulations as well as state support for international expansion.

The emergence of a new set of technology stakeholders explains why India has signed FTAs with dedicated digital chapters. The India-UAE Comprehensive Economic Partnership Agreement of 2022 contained mainly best-efforts language. By contrast, the India-UK FTA contains hard commitments.