US-India trade deal must tackle 'Make In India' barriers, says trade body representing global software industry majors

US President July 16 said the United States may soon strike another trade deal, this time possibly with India.

The Business Software Alliance (BSA), a global industry group representing major software and cloud firms, has urged the United States government to use the ongoing trade deal negotiations with India to push for changes to key digital rules under the “Make in India” policy.

The group is calling for exemptions from India’s “Make in India” public procurement rules and the rollback of restrictive data policies that it says disadvantage US companies.

In a submission dated July 7 and addressed to senior US trade and commerce officials, BSA said the current moment presents an opportunity to secure long-pending changes that would open up India’s digital economy to fairer competition.

Some notable members include Adobe, Amazon Web Services, Autodesk, IBM, Microsoft, Oracle, and Salesforce.

“The ongoing trade negotiations with India present an important opportunity for the US to secure 1) substantial and meaningful reforms to India’s public sector procurement policies by exempting software and cloud services from the Make in India local content requirements, and 2) substantial improvements to India’s data governance regime by eliminating unnecessary data localization requirements and data transfer restrictions as part of a negotiated outcome,” the submission said.

India’s Make in India Public Procurement Order, first issued in 2017 and revised in 2020, mandates preference for domestically manufactured goods in public procurement.

According to BSA, applying these local content rules to software and cloud services is misguided and damaging to the interests of global software providers as well as Indian government agencies.

“Because of the distributed approach to software development and software’s intangible nature, applying local content requirements designed for physical goods is harmful not only to US software providers, but to the Government of India agencies and entities seeking to benefit from US software products and services,” BSA said.

The group said these rules treat software as if it were a tangible good, ignoring the global and collaborative nature of modern software development. This, it said, makes it difficult for US firms to respond to tenders and blocks them from offering their products and services on platforms like the Government e-Marketplace (GeM).

In addition to procurement hurdles, BSA also raised concerns over India’s data policies. It flagged rules and proposals from agencies such as Ministry of Electronics and Information Technology, Indian Computer Emergency Response Team (CERT-In), Reserve Bank of India, IRDAI, SEBI, and DoT that require firms to store data in India or restrict international data transfers.

These include CERT-In’s 2022 directive mandating logs to be stored locally, RBI’s payment data storage rule, and provisions in the draft rules under the Digital Personal Data Protection Act.

“These policies undermine the economic interests of US companies offering cutting edge services to different types of customers in India. These policies also jeopardize cybersecurity, privacy, innovation, and other policy imperatives,” the BSA said.

The submission called for India to remove or amend these provisions, particularly Rules 12(4) and 14 of the draft data protection rules, which grant broad powers to mandate localization and restrict cross-border transfers.

By raising these issues during trade talks, BSA said the US could both protect its commercial interests and demonstrate its willingness to challenge discriminatory digital trade practices.

The group had previously made similar representations to MeitY and the USTR, pointing out the growing friction faced by global software companies in navigating India’s digital regulatory environment.