But India is now making changes to the rules of operating in the country that could make the next decade much tougher for those global tech firms trying to profit from its massive market. A raft of regulations in the works will affect how companies — particularly foreign ones — collect and store data, sell products online and protect their users’ privacy. With growing, government-backed internet shutdowns, their basic access to their users is being cut off in many parts of the country.
With nearly 700 million internet users and almost an equal number of people yet to come online for the first time, India is too big a market to ignore. But the tightening of restrictions on foreign tech companies and government intervention in controlling the internet are sparking concerns that the world’s largest democracy is becoming increasingly China-esque.
“A heavy-handed government that wishes to use technology to surveil its own citizens or control the narrative by curtailing their free speech and expression is not interested in using technology for the good but merely to control,” says Mishi Choudhary, co-founder and legal director of New York-based tech advocacy group Software Freedom Law Center. “In such scenarios comparisons with the Chinese authoritarian internet are natural.”
What India does next will likely have implications for the internet far beyond its own borders.
“India’s potential and opportunity are undisputed, however its attempt to artificially ringfence itself from the global digital economy is concerning,” says Jeff Paine, managing director of the Asia Internet Coalition, a tech industry group whose members include Google, Facebook, Amazon and Twitter. “We hope policy makers will take a holistic and long-term view.”
Dealing with data
Most closely watched is a new piece of legislation that could place constraints on the way tech companies store and process data.
The proposed rules allow the government to exempt its own agencies from following them, meaning Indian authorities can effectively collect any personal data that they deem necessary.
“The current data protection legislation lacks people protection and gives government a supra interest over everyone,” says Choudhary, adding that Indian regulations could force tech companies into a tough spot as they face growing distrust from users around the world about privacy.
“They will be forced to make the choice between privately kowtowing to all demands or resisting extra-judicial demands on their users,” she said. “An informed, empowered user will not settle for any piece of technology that sells them to authorities without any legal basis.”
The government can also define “critical personal data” that companies will be forced to store only in India. In theory, the government could compel companies to keep some user data within the country’s borders and try to force them to hand it over to law enforcement.
“These are global companies, they’re global operations, they’re global products and services, and in many instances there’s an actual need to have data move back and forth pretty regularly,” said Jay Gullish, who heads tech policy at the US-India Business Council, an advocacy group linked to the US Chamber of Commerce that represents companies working in both countries. “I think the concern now is that the bill … is clearly not along the lighter side of regulation,” he added.
Gullish says some companies are holding off on investments in India until there is more clarity on the policy landscape.
“Companies don’t want to have multiple operations, different processes in different countries,” he said.
“It’s rare that there’s ever a clear answer on what regulation should look like,” Ankhi Das, the company’s director of public policy in India, told CNN Business via email. “These are important decisions to get right as they impact millions of Indians that use the internet everyday.”
“I fully expect us to… have more regulation,” he said.
Google has previously said restrictive rules on local data storage would hurt India’s tech growth.
Google, Twitter and Amazon did not respond to requests for comment for this story. India’s Ministry of Electronics and Information Technology did not respond to a request for comment.
Tightening the screws
The data bill isn’t the only Indian regulation ratcheting up the pressure on big tech firms.
Constraining big global firms could backfire on India’s broader e-commerce industry, says Paine.
“Overly prescriptive regulation and onerous compliance obligations … would act as market barriers and stifle growth and competitiveness,” Paine said, adding that they could also “significantly restrict consumer choice and access, creating a lag for Indian consumers behind global contemporaries.”
India could also escalate its ongoing dispute with Facebook and its mobile messaging service, WhatsApp. The Indian government is expected to move forward with amendments to its technology laws that would force social networks and messaging platforms to trace individual messages that the government deems a threat. The proposed changes also require that social networks such as Facebook and Twitter take down “unlawful” content within 24 hours.
“Alternatively they could remove themselves from the Indian market altogether, depriving 1.2 billion people of state-of-the-art internet security,” she added. “Neither of these are good outcomes.”
Along with onerous regulations, the basic infrastructure tech companies use to reach their users is coming under strain.
Even with the price hikes, mobile data in India is still among the cheapest in the world, according to Nikhil Batra, telecom analyst at research firm IDC. But the years-long price war is holding back investments in newer technologies like big data and artificial intelligence.
“All of the focus right now is on fighting the competition in the market, which is hurting the overall industry,” Batra said.
And even relatively small changes in price could preclude millions of the poorest Indians from internet connectivity.
The Indian government has restricted internet access in many other parts of the country in recent months — including briefly in the capital city New Delhi amid protests against a controversial new citizenship law.
“India imposes internet restrictions more often than any other country,” the report said.
The China model
India’s internet growth was fueled in part by its relative openness compared to its larger northeastern neighbor — Google, Facebook and Twitter have been mostly shut out of China’s tightly controlled and monitored internet, restricting their ability to reach the world’s biggest online population.
And while India’s internet is still largely open, its efforts to exert more control online have raised red flags.
“The divide between east and west on matters of internet governance — and more broadly, freedom of expression and open access to information — is stark,” says Dipayan Ghosh, co-director of the Platform Accountability Project at Harvard University’s Shorenstein Center on Media, Politics and Public Policy.
While Ghosh says privacy regulations and more protections for online citizens are necessary and long overdue, the possibility that India could move closer to China is “deeply troubling” for a country that still considers itself a vibrant democracy.
“The world is trying to move in the direction of democracy and openness, and a few countries are moving the other way — closing down pathways for exchange and suppressing threats to incumbent governmental power,” he said. ” Should India choose the latter path, it will doubtless rankle many around the world and spell trouble for India’s standing, politically and economically.”
Despite the growing obstacles, global tech companies are unlikely to stop treating India as a priority. They can’t afford to.