US diplomat flays India's new data localisation, e-commerce rules

"We are concerned about the data localisation law and the new e-commerce regulations...they do not fully take into account the needs of all stakeholders, including American and other foreign companies," acting principal deputy assistant secretary of the US, Thomas Vajda said.

Ilustration: Uttam Ghosh/Rediff.com

Washington has expressed concerns over the new policy measures on data localisation and restricting e-commerce play by foreign companies, exhorting New Delhi to consult all key stakeholders before making any such move.

It is in everybody's interest to have an open and transparent business environment, the acting principal deputy assistant secretary of the US, Thomas Vajda, told reporters in Mumbai on Tuesday.

"We are concerned about the data localisation law and the new e-commerce regulations...they do not fully take into account the needs of all stakeholders, including American and other foreign companies," the visiting diplomat said.

"It is in India's interest when it undertakes these new policies to reach out to all stakeholders and think very carefully about the impact on the overall business environment," he said.

The comments come amid a slew of regulations, especially in the financial sector, which are require data localisation, which has been criticised as contrary to the spirit of globalisation and the evolution in technology where everything is going on to the cloud.

Richest Indian Mukesh Ambani, chairman of Reliance Industries having interests in telecommunications and commerce, has strongly pitched for data localisation.

The Modi government, facing national elections soon, has also put restrictions on e-commerce firms like Amazon and Flipkart on the goods that they sell on the platform to ensure that the sellers are not owned by them, which along with an 'angel tax' has impacted the flourishing start-up ecosystem.

The new FDI rules in the e-commerce space have been flayed as to placate the electorally powerful petty traders.

The new rules came within months of the US retail giant Walmart picking up a controlling 77 per cent in the largest homegrown ecommerce major Flipkart for $16 billion, making it the single largest FDI ever into the country.

Vajda said it is "important" to have a sound enabling environment for both "foreign direct investment and foreign commercial activity" and added Washington is willing to work with New Delhi on matters like these.

The US has created a USD 60-billion fund which will take equity interests, offer technological assistance and also extend political risk insurance to firms in the Indo-Pacific region, Vajda said.

Making clear that the US will not match China for every dollar spent in the strategically important region, Vajda said Beijing's investments or other assistance has to keep up with standards as laid out by the Asian Development Bank or the World Bank.

Pointing out to "predatory and coercive" play by Beijing, he cited a project in Sri Lanka which was not commercially feasible and will eventually "erode" the island nation's sovereignty.

He said the US has tied up with India, Japan and Australia for developing the Indo-Pacific region.

Peaceful resolution of disputes, freedom of navigation, open and transparent business environment and strong governing institutions are the important aspects which the partnership is vying for, Vajda said, adding the idea is to push private sector-led growth in the region.

Vajda said he was in the financial capital to speak with Indian and American companies about the strategy and see how they can tap into the opportunities that will be created.

Vajda declined to comment on H1-B visa row and talent management issues faced by Indian companies in the US, pointing out that this is not in his remit.

On the sanctions against Iran, he said a few countries, including India, were allowed to time by the US to reduce their oil imports and two of them have gone to zero already, making it clear that others will also have to emulate the same.