India and the European Union:
Creating free trade in the Indian ICT market
Indian protectionism in the ICT market: straining relations with the EU
Protectionist measures in India’s information and communication technology (ICT) market are straining relations with Europe. Leading European companies invest heavily in Indian labour because of their highly skilled and innovative labour force. Yet, the Indian government has created trade barriers to prevent foreign companies from selling ICT products to Indian consumers. As the voice for the digital industry in Europe, DIGITALEUROPE is calling for trade liberalisation in India to assure equal opportunities for foreign ICT companies to trade in Indian markets.
While several practices are obstructing EU-India trade in ICT, preferential market access (PMA) for Indian companies is the most problematic. Claiming national security concerns, the Indian government regularly bars foreign companies from trading in domestic markets. While we applaud the government’s efforts to enhance local manufacturing, these policies disrupt international trade and break global value chains. Product security is a function of how a product is made, used, and maintained, not by whom or where it is made. While protectionism may tempt some politicians, it is not good business. Protectionist measures like PMA prevent competition, create inefficient products and services, and distort market prices among many other drawbacks.
Foreclosing opportunities for growth
India has benefited tremendously from integration with global markets to become one of the leading economies providing ICT goods and services. Revenue for the ICT sector is now estimated at nearly 1 billion Euros and provides livelihoods for about 10 million people. The ICT sector has not only created an economic boom, but also contributed to social transformation by growing an aspirational middle class in India.
Perversely, India’s trade wall forecloses opportunities for future growth and advancement. While preferences for Indian manufacturers may create jobs in the short term, India ultimately loses in the end. Competition brings prices down for consumers, and also stimulates innovation and increases quality. This is especially true in the ICT industry because of the global nature of our market.
Advocating for reform on three fronts
As the voice of the digital industry in Europe, improving ICT trade relations between the EU and India is a priority for DIGITALEUROPE. Our advocacy efforts are focused on three fronts.
- EU-India Free Trade Agreement: We are working closely with the EU leaders to produce a FTA between India and the EU that includes measures to protect the rights of European companies in India.
- Information Technology Agreement: We encourage India to sign an expanded Information Technology Agreement (ITA) at the World Trade Organisation. This agreement would lower tariffs on ICT products to zero in India, removing some of the biggest challenges to trade.
- Dialogue : We participate in India Information Society dialogues and other relevant events to improve EU-India cooperation in ICT. These opportunities enable our industry members to discuss the impact of India’s trade barriers on the ICT sector.
Committed to improving EU-India relations
DIGITALEUROPE is committed to improving the strategic relationship between Europe and India by creating more favourable trade conditions for all parties. If India removes its trade barriers for ICT, it would enable competitive, free trade that is ultimately good for both companies and consumers alike at a global scale.
For more information contact:
Senior Policy Manager