Has US scrapped tariff deal over India’s ecommerce regulations?
Yesterday US President Donald Trump announced the desire to end preferential trade terms for India under the GSP programme. The programme allowed for no tariffs on certain goods between the two countries–includng textiles, gems and chemicals–but did not, in Trumps’ eyes, provide an ‘equitable and reasonable’ access to the Indian market.
The question now turns to what extent the move was in response to India’s proposed policies on e-commerce.
The policy measures, which were in place largely to combat counterfeit operations and better control data, have had major effects on US companies invested in Indian ecommerce. Amazon and Flipkart, owned by the US Walmart, stand to be affected greatly by the proposed laws as they are by far the largest players in the ecommerce market in India. The framework will also address counterfeit goods by increasing liability on those that sell such goods and will require all ecommerce players to be locally registered as a business.
Beyond that, however, user-generated data generates enormous revenue and the new regulatory framework stands to affect not just ecommerce but social media platforms like Google and Facebook as well.
Some are seeing the new rules as welcome but others are seeing it as a pattern of encroaching nationalism within tech in India. India also changed the rules on how international players do business in the country’s ecommerce market as new regulations governing foreign investment were introduced this year.
It now appears that the US is using its trade muscle to fight back against these regulations though time will tell who comes out of the bargain the better. The latest salvo is likely a manifestation of the tension between the current ideologies that underpin the two countries. Whereas Trump’s ‘America First’ policies won him national popularity, Prime Minister Modi’s ‘Make in India’ too has won its admirers, and the two doctrines appear at odds when coming to securing a deal.