ITA-1 lacks exit clause, data privacy rules, committee finds

Who it concerns: Ministry of Communications and Information Technology; Indian electronics industry, importers, and consumers of IT products.

What the committee found

• The Committee observed that zero-duty imports under ITA-1 exposed India's underdeveloped electronics industry to premature global competition, increasing import dependence on countries like China and concentrating activities in assembly rather than manufacturing.
• The Committee noted that ITA-1 lacks an exit clause or renegotiation mechanism and applies on a most-favoured nation basis, restricting India's regulatory autonomy and allowing non-signatory countries to access benefits.
• The Committee recommended constituting a High-Level Empowered Inter-Ministerial Committee to examine the agreement's impact on the Indian IT industry.
• The Committee recommended adopting interim measures such as non-tariff measures, raising the issue of predatory pricing at the WTO, and pursuing bilateral Free Trade Agreements.
• The Committee noted that ITA-1 does not address cybersecurity protocols or data privacy standards, potentially increasing risks from embedded software with surveillance capabilities.
• The Committee recommended enforcing the Digital Personal Data Protection Act, 2023, and mandating strict security testing and certification of imported devices at accredited labs.
• The Committee noted that India has not signed ITA-2, which lacks an exit clause and ambiguously classifies products used in 5G and AI technologies.
• The Committee recommended raising concerns at the WTO regarding the inclusion of 5G equipment and AI components, clearer classification for hybrid digital products, new Harmonised System (HS) line codes, and mechanisms for technology transfer.
• The Committee observed that increased IT product consumption has led to higher e-waste generation and recommended incentivizing recycling through tax benefits, integrating informal waste collectors into formal systems, and promoting green technology investments.
• The Committee recommended negotiating Special and Preferential Treatment for developing countries at the WTO and developing bilateral/multilateral Free Trade Agreements with them.

Also in the document

• The Committee noted that ITA-1 does not include an exit clause or a mechanism for renegotiation.
• The Committee observed that India has not signed ITA-2.
• The Committee noted that ITA-1 does not address or enforce any cyber security protocols or data privacy standards.