India faces threat of digital colonisation

The last quarter of 2019 witnessed two seemingly disparate events in New Delhi. Nick Clegg, the erstwhile deputy prime minister of UK, lobbied hard for free flow of digital data across borders and author William Dalrymple’s much awaited book on the East India Company (EIC) was out globally. What Clegg is doing on behalf of the global digital giants fits well with Dalrymple’s description of how the EIC came to acquire influence and completely dominate India a few centuries ago.

This connection should compel our policymakers and political leadership to have a hard look at how, through trade agreements, India stands at the brink of literally signing away its digital prosperity and future.

While most of the facts about the EIC are generally well known, some aspects of Dalrymple’s engaging narrative bear a striking resemblance to the strategies being used by digital giants in their quest for global dominance and profits. It is relevant to recount some key points made by Dalrymple.

First, the basic objective of EIC was to make windfall profits through securing monopoly over trade. Second, in its rapacious pursuit, the EIC enjoyed the backing of the British Parliament.

Third, the interests of many local Indian communities, particularly Jagat Seths and bankers, and the EIC converged. In pursuit of their narrow self-interest, many local bankers in India competed among themselves to supply almost unlimited credit to the EIC, unmindful of the larger impact of their action.

Fourth, local kings in India failed to grasp the big picture — through incremental steps, the EIC was wresting political and economic power from them. Often, the long-term adverse consequences of their interaction with the EIC were either not even understood, or simply ignored, for the expediency of extremely short-term gains.

By the time they realised the intentions of the EIC, the ground had completely slipped under their feet.

Pursuit of data

What do these elements of colonial narrative have to do with digital world of today? Let us see.

The digital world survives and thrives on access to data. Those who have access to data, prosper. A recent study estimates that within the next few years, the value generated by the digital giants from the online data of people in the US is likely to exceed the value of agriculture output of the country. It is, therefore, not surprising that the digital giants in the developed world want to retain their first-mover advantage by having access to data from countries such as India, and for free.

The attempt by Clegg, presently on the payrolls of the global leader in social media, to push for free flow of data is really a part of the larger concerted attempt by digital giants to protect their monopolistic business from potential competition from firms in emerging developing countries, including India.

In a narrative reminiscent of the colonial times when the EIC was attempting to get a foothold in India, Clegg cleverly camouflaged the business interests of his principals and instead, projected free flow of data as being democratic and also in India’s interest.

In pursuit of their commercial interest, digital giants are actively using their governments to negotiate trade deals, which would require countries such as India to surrender their data advantage to the developed world. We are already seeing this happening at the WTO, where 75 countries are engaged in negotiating such a deal. Domestically, it is no secret that the digital giants are lobbying hard to prevent India from mandating data localisation.

Much like the story of the EIC, the business interests of the digital giants are being promoted by lobby groups and some industry associations in India. As the commercial prospects of some of the prominent firms in the IT services sector in India are tied with their interests in the developed world, they have not hesitated in pushing for cross-border data flows.

It is but natural that all these entities will pursue agendas that suit their commercial interest. They cannot be expected to think of the larger national interest. It is here that the critical role of the government comes in.

Facilitate digital progress

The government has to take a long-term strategic view of cross-border data flows. If we aspire to create a digital economy of $1 trillion, then the government will have to go beyond the IT services stars of today, and facilitate establishment of the superstars of tomorrow. These will be firms that leverage India’s data advantage for creating jobs and generating income. This will be almost impossible if the country fails to treat data as a national asset to be used for long-term progress and technological development of our country.

In the context of building a strong domestic digital sector, there was a glimmer of hope when Prime Minister Narendra Modi showed tremendous wisdom in not agreeing to the Osaka Track on data flow with trust, which was championed by the Japanese Prime Minister during the G20 Leaders’ Summit held in June this year. The policymakers and political leadership need to ensure that what Modi secured for the country at Osaka is not totally frittered away through negotiations at the WTO, or in deals with the US and other countries.

In conclusion, the interests of multinational companies in developed countries being championed by their governments has been our recurring experience in the past. Let us recall the following words of a famous philosopher: “Those who cannot remember the past are condemned to repeat it”.

The government needs to draw lessons from how the East India Company established roots in India and ensure that the curse of digital colonisation does not fall on the country through trade agreements.

The writer is Head, Centre for WTO Studies, IIFT-Delhi. Views are personal