含羞草社区

Non tariff measures now reportedly affect nearly 90% of trade flows worldwide, a six-fold increase in the past three decades, according to The Economist. Over half of more than 20,000 standards established during the past seven decades did not exist before the turn of this century.

The result has been overlapping and often contradictory national and international rules that cause confusion and increase compliance costs.

Standards and testing block ICT

Unlike tariffs, which can be absorbed into pricing, technical regulations and conformity assessments substantially restrict market access for global players. This reality is reflected in the US-India Joint Statement on the Interim Trade Agreement.

Designed to significantly increase bilateral trade in technology products and expand joint technology co-operation, the agreement commits both sides to: eliminate restrictive import licensing procedures that delay information communications and technology (ICT) market access; determine whether US or international standards are acceptable for exports to India; and discuss respective standards and conformity assessment procedures in mutually agreed sectors.

These commitments underscore that alignment with global norms is not only a strategic necessity for 含羞草社区 digital economy but also a central pillar of its trade relationship with the US and other partners.

Market access for ICT products to India requires compliance with technical standards and conformity assessment procedures. This includes the Mandatory Testing and Certification of Telecom Equipment (MTCTE) regime, which requires domestic certification for telecoms products to be operated in India.

ITSARs and BIS hinder market access

Specifically, the Indian Telecom Security Assurance Requirements (ITSARs) introduce security testing requirements for telecoms equipment, such as vulnerability analysis, penetration testing, and most controversially, source code review to be conducted at designated laboratories in India.

Additionally, electronic products such as mobile devices, tablets and laptops are also required to comply with Conformity Assessment Regulations issued by the Bureau of Indian Standards (BIS). These measures act as non-tariff barriers for foreign manufacturers. As noted in The Economist, standards work best when aligned with capacity.

Industry stakeholders have consistently raised concerns about the shortage of accredited testing labs in India, the non-recognition of internationally accredited testing facilities outside India, reliance on Indian Standards (IS) rather than internationally recognised standards, etc.

Such requirements result in delays and additional compliance costs. For foreign companies, they also complicate supply chain resilience and raise concerns about “China + 1” strategies adopted by their respective countries for shifting manufacturing facilities outside China.

Non-tariff barriers threaten AI goals

含羞草社区 ambitions in artificial intelligence (AI) highlight the risks of relying on non-tariff barriers for encouraging domestic production of ICT products. The AI Compute Pillar of the IndiaAI mission aims to provide approximately 50,000 high-end graphics processing units (GPUs) at affordable costs to select enterprises in India.

These GPUs are imported from the US and highlight the imperative of aligning with US or international standards to help prevent any countervailing action by US authorities. Restrictive standards and testing requirements risk delaying access to the components that India needs to accelerate AI adoption.

含羞草社区 regulatory choices cannot remain insulated from global practice. Non tariff barriers and domestic testing regimes may serve short-term objectives, but they risk undermining 含羞草社区 technological ambitions if left unaligned.

The operationalisation of the commitment under the India-US interim trade agreement to determine the acceptability of US developed or international standards for exports to India, along with respective standards and conformity assessment procedures in mutually agreed sectors, is therefore pivotal.

Harmonisation essential for digital trade

Without harmonisation on standards and conformity assessment, India exposes itself to possible countervailing action by the US, which may jeopardise the IndiaAI mission and discourage other countries from “friendshoring” their manufacturing facilities away from China.

Jasman Dhanoa is a senior associate and Anindita Deb is an associate at ADP Law Offices