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The United States and India Need a Digital Handshake

Mistrust and disagreements over privacy have impeded a partnership that could transform the global digital economy.

By , a nonresident fellow at the Atlantic Council’s South Asia Center, and , a nonresident fellow at the Atlantic Council’s Cyber Statecraft Initiative and a contributor at Wired.
U.S. President Joe Biden and Indian Prime Minister Narendra Modi
U.S. President Joe Biden and Indian Prime Minister Narendra Modi
U.S. President Joe Biden and Indian Prime Minister Narendra Modi meet in Tokyo on May 24. SAUL LOEB/AFP via Getty Images

For all the strides in their 21st-century strategic partnership, the United States and India have struggled to find convergence in the digital domain. Despite the U.S. technology firms betting big on India’s digital ecosystem and the large number of Indian engineers in Silicon Valley, the two countries are drifting further apart on data governance, competition policy, and digital trade. Washington and New Delhi risk squandering a golden opportunity to transform their relationship and the global digital economy.

U.S.-India tensions over technology are not new, but they have escalated. Since 2017, Washington has voiced concerns as New Delhi moved to restrict cross-border data flows, regulate nonpersonal data, displace U.S. payments and e-commerce companies, and ramp up internet shutdowns. Indian officials have criticized U.S. inaction on regulating tech giants and reforming immigration policies. Actions by U.S. firms, such as suspending services in Russia after its invasion of Ukraine, have also raised alarm in New Delhi. Indian commentators have framed overreliance on U.S. technology as a strategic risk: What’s to stop Big Tech from pulling the plug on India if a crisis pits Washington against New Delhi?

The U.S.-India digital relationship may never yield complete alignment, but officials must prioritize overcoming these disagreements. A breakthrough could serve as a model for the United States to work with other countries in Asia that share India’s concerns about U.S. technology but also seek foreign investment. Furthermore, it would enable the United States to engage India in an area of strength: The country is home to more than 100 start-ups valued above $1 billion and seeks to compete with China. Bringing India closer into alignment with the United States on digital policy would be an economic and geopolitical win for Washington, even if it requires tough compromises.

For all the strides in their 21st-century strategic partnership, the United States and India have struggled to find convergence in the digital domain. Despite the U.S. technology firms betting big on India’s digital ecosystem and the large number of Indian engineers in Silicon Valley, the two countries are drifting further apart on data governance, competition policy, and digital trade. Washington and New Delhi risk squandering a golden opportunity to transform their relationship and the global digital economy.

U.S.-India tensions over technology are not new, but they have escalated. Since 2017, Washington has voiced concerns as New Delhi moved to restrict cross-border data flows, regulate nonpersonal data, displace U.S. payments and e-commerce companies, and ramp up internet shutdowns. Indian officials have criticized U.S. inaction on regulating tech giants and reforming immigration policies. Actions by U.S. firms, such as suspending services in Russia after its invasion of Ukraine, have also raised alarm in New Delhi. Indian commentators have framed overreliance on U.S. technology as a strategic risk: What’s to stop Big Tech from pulling the plug on India if a crisis pits Washington against New Delhi?

The U.S.-India digital relationship may never yield complete alignment, but officials must prioritize overcoming these disagreements. A breakthrough could serve as a model for the United States to work with other countries in Asia that share India’s concerns about U.S. technology but also seek foreign investment. Furthermore, it would enable the United States to engage India in an area of strength: The country is home to more than 100 start-ups valued above $1 billion and seeks to compete with China. Bringing India closer into alignment with the United States on digital policy would be an economic and geopolitical win for Washington, even if it requires tough compromises.

But the United States and India must first recognize that they have a tech trust deficit—an inability to engage in constructive dialogue on digital issues. Mistrust hamstrings efforts to address these issues within the context of bilateral trade talks; in a multilateral context, it limits U.S. engagement with India through the Indo-Pacific Economic Framework, the Biden administration’s new initiative to compete in Asia.

U.S.-India cooperation under the framework is likely to focus on supply chains, which Indian Prime Minister Narendra Modi has emphasized while sidestepping its digital trade components. Even within the Quadrilateral Security Dialogue—which includes Australia, India, Japan, and the United States—the tech trust deficit has led digital initiatives to be placed under a security umbrella, with a focus on emerging technologies rather than on issues such as cross-border data flows and foreign investment.

To reverse their tech trust deficit, the United States and India should pursue a so-called digital handshake to address policy differences and create institutional structures to drive progress. Both countries can take some inspiration from the European Union, which has worked separately with the United States and India to set up Trade and Technology Councils (TTCs) that provide a platform to discuss digital issues at the highest political levels. The EU-U.S. TTC concluded its second meeting last month, bringing together cabinet-level officials covering diplomacy, trade, and technology. The EU-India TTC was announced during European Commission President Ursula von der Leyen’s latest visit to New Delhi, and it will likely follow a similar format.

Washington and New Delhi still lack this type of high-level dialogue on digital issues. The long-running U.S.-India Information and Communication Technology Working Group dialogue meets infrequently and convenes midlevel officials from the U.S. State Department and the Indian Ministry of Electronics and Information Technology, which are not natural counterparts. Meanwhile, the Trade Policy Forum brings together cabinet-level trade ministers from both countries annually, but it addresses digital trade issues only as part of a discussion on services. As a result, even the most important disagreements get limited airtime, and both sides miss out on opportunities to discuss areas of convergence.

Officials could solve these challenges by adapting the best elements of the TTC structure to fit the U.S.-India context. Specifically, both countries should set up a new digital economy ministerial that brings together cabinet-rank officials from the Office of the U.S. Trade Representative, the U.S. Department of State, and the U.S. Department of Commerce with India’s IT, External Affairs, and Commerce ministries. The ministerial could meet each year and establish working groups on the areas of greatest relevance to both countries: data privacy and data governance policy, civil liberties, technology and social good, e-commerce, digital and financial inclusion, and digital supply chain and manufacturing.

Of course, setting up a bureaucratic structure is not enough. It needs political backing from U.S. and Indian leaders. U.S. President Joe Biden and Modi should use their next visit to announce the U.S.-India digital handshake and the creation of a digital ministerial. With the right bureaucratic structure and political follow-through, the two leaders could empower action on more substantial tech cooperation rather than empty rhetoric. This is critical if both leaders hope to expand trade flows or pave the way to an ambitious U.S.-India free trade agreement.

The United States and India each recognize that there is much to be gained in searching for common ground. If left unaddressed, fundamental disagreements over issues like digital privacy can lead to regulatory or technical fractures that impede data flows and undermine cooperation. This doesn’t mean the United States should seek cooperation at any cost; the Modi government’s efforts to access citizens’ data are troubling. But data sharing under the right regulatory frameworks in other areas, such as health care or cybersecurity, could help citizens while promoting privacy in both countries.

Washington and New Delhi must now realize this vision and put forth the digital handshake that can overcome their tech trust deficit to cement a more fruitful, strategic, and democratic digital partnership.

Anand Raghuraman is a nonresident fellow at the Atlantic Council’s South Asia Center. He was previously a vice president at the Asia Group, where he advised multinational companies operating in India and across South Asia. Twitter: @akraghuraman

Justin Sherman is a nonresident fellow at the Atlantic Council’s Cyber Statecraft Initiative and a contributor at Wired. Twitter: @jshermcyber

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