Is India Digitally Prepared for International Trade?
The paper assesses India’s digital preparedness for international trade by comparing its digital infrastructure to other major developing countries’ and identified developed countries’ digital infrastructures. Further, the paper estimates value-added by digital services in exports of 43 countries using world input-output database (WIOD) and compares digital content in India’s total exports and sectoral exports for the years 2007 and 2014. The results show that India lags many developing as well as developed countries in terms of its digital preparedness for international trade, including in its traditional export sectors. Despite ranking high in terms of its global exports of digital services, the value-added by digital services in India’s exports of sectors other than ICT and telecommunications is found to be lower than many countries, indicating lopsided digitalization of India’s exports. Given the many initiatives undertaken by the Government on digitally transforming India under its Digital India program, there is a need to leverage these initiatives to boost India’s trade competitiveness. In this regard, the paper suggests designing Digitally-Informed Foreign Trade Policy with the objective of improving India’s digital infrastructure for trade, enhancing digital content of its exports; building digital skills in tradeable sectors; promoting use of digital technologies in manufacturing exports; and using big data analytics to inform foreign trade policy on ways of improving trade competitiveness. The need to preserve policy space in the on-going trade and investment agreements is emphasized especially with respect to cross-border data flows.