Digital divide: India-UK FTA faces data flow rift

In the negotiations on the deal, the UK has demanded free cross-border data flow and a ban on data localization. The UK opposes India’s demand for mandatory transfer of source codes, algorithms and encryption keys.

“The UK and India appear to be very far apart on these issues. A major potential stumbling block in this regard has been the Indian government’s pursuit of legislation that could have the effect of requiring data localization," the International Trade Committee report said.

“It remains to be seen how far the latest iteration of draft Indian data legislation, the Digital Data Protection Bill, will prove an obstacle to fulfilling the UK’s offensive interests in this regard," the committee said.

The International Trade Committee is appointed by the lower house of parliament to examine the policies and working of the UK’s department for international trade. The reports are prepared on the basis of consultations and hearings with stakeholders.

The report cautioned that increased market access for India in respect of sectors such as textiles, clothing, footwear and horticultural products could have an adverse impact on some developing countries in South Asia, South-East Asia and East Africa which benefit from preferential access to the UK market.

India has made market access for textiles a major demand in most of the FTAs it has negotiated, as the textile sector is the biggest domestic job creator.

The report said civil society organizations had drawn attention to “ongoing violations of human rights and labour rights in India". These included “wage theft in the garment sector and labour abuses in tea supply chains that include forced labour, failure to pay the minimum wage, gender discrimination and suppression of freedom of association."

Civil society groups have also drawn attention to increased emissions and potential “carbon leakage" resulting from an FTA, noting that the Indian textile and apparel industry is a key contributor to air pollution, poor water quality and water stress, the report added.

One such group, Traidcraft Exchange, has called for a stronger climate chapter than the one in the UK-Australia FTA.

It also calls for such a chapter to be subject to the agreement’s dispute settlement process and include provisions targeting the development of “agro-ecology" (“as opposed to industrialised agriculture") and strengthening climate co-operation between the parties.

India has a notable offensive interest on removing the UK’s tariff on milled rice, the report added. The UK Rice Association, which represents the processing industry, has argued that removing this tariff will undermine a sector worth £900 million a year. India and the UK have completed eight rounds of negotiations and are scheduled to hold the ninth from 24 to 28 April. As many as 13 out of the FTA’s 26 chapters have been closed so far.