Digital Trade

In the absence of a widely accepted definition, OECD’s version,  “digital trade involves digitally ordered but physically delivered trade in goods and services (e.g. the purchase of a book through an on-line marketplace or booking a stay in an apartment through a matching application) and digitally delivered trade (e.g. movie or music streaming services), has become the most accepted. 

In 1998, India participated in the WTO Moratorium on Electronic Transmissions (adopted as part of the WTO Declaration on Global Electronic Commerce) – a global discussion on exempting electronic transmissions from customs duties, advocating for the interests of developing countries.  

Several years later, at the 2017 Buenos Aires Ministerial Conference, a group of WTO members formed the Joint Statement Initiative (JSI) on E-commerce to establish trade rules for e-commerce. India opted out of the JSI, citing concerns about the mandate on free flow of cross-border data.  Another point of contention was the E-commerce Moratorium on Customs Duties for Electronic Transmissions, which bans customs duties on electronic transmissions. Citing the interest of their domestic economy, India and South Africa jointly opposed the Moratorium, on grounds of revenue loss and protection of nascent industries from foreign competition.  On July 26, 2024, 80 WTO members reached a “stabilised text” for an Agreement on Electronic Commerce, outlining negotiated commitments. A final agreement is still to fructify.  

In parallel, the United Nations Commission on International Trade Law (UNCITRAL) has adopted three model laws to harmonize electronic transaction frameworks globally: the Model Law on Electronic Commerce (1996), Model Law on Electronic Signatures (2001), and Model Law on Electronic Transferable Records (2017). As of April 2024, UNCITRAL had 56 member countries from the APAC region, including India. 

In 2022, India also participated in the Indo-Pacific Economic Framework (IPEF), a plurilateral trade agreement. While India signed off on other pillars, India chose to retain observer status for the trade pillar, of which digital trade is a part. India has also engaged in digital trade discussions though other agreemnts including the Comprehensive Economic Partnership Agreements (CEPA) with Japan and the UAE, while advocating for data sovereignty and regulatory autonomy in global forums like the WTO. Further, the India-Singapore Comprehensive Economic Cooperation Agreement (CECA), which includes a chapter on e-commerce, emphasizes cooperation on digital trade, even though its provisions are non-binding. This agreement underscores mutual intent to leverage digital platforms and facilitate the digital economy between the two nations.  

India has also expanded its digital trade partnership with Saudi Arabia through the Digital Economy Cooperation Agreement signed in October 2022. This agreement fosters collaboration in areas like artificial intelligence, innovation, and the digital economy, marking a significant step in strengthening bilateral relations in the evolving digital landscape.  

India’s position on cross-border data flows evolved from strict localisation to permitting secured flows. While it opted out of the Data Free Flows with Trust (DFFT) initiative proposed by Japan in 2019 as part of Osaka Leaders’ Declaration, India indicated a shift in its policy in 2023 by enacting the Digital Personal Data Protection (DPDP) Act, 2023 enabling secure cross-border data flows while prioritizing privacy. The Act adopts a “blacklist approach” to data transfers, allowing transfers to all countries except those specifically restricted. It also permits sector-specific regulations that may impose additional data localization requirements for categories such as financial, health, and telecommunications data. The DPDP Act mandates that sensitive personal data be stored on Indian servers and requires cybersecurity compliance logs to remain accessible to Indian authorities. The law applies to the processing of digital personal data within India and extends to foreign entities offering goods or services to individuals in India.