India–USA Strategic Partnership in the Digital Economy: Hurdles and Limits

The USA’s advanced capabilities provide it with a significant advantage in generating, capturing, storing, and utilizing big data pools. India’s increasing population combined with ongoing robust digitalization offer not only lucrative market opportunities but also a source of big data pools for US digital corporations. Since the 1990s, India’s IT sector has remained significantly intertwined with the US market by supplying services to US business entities. This interdependence was premised on both states’ tacit espousal to the principle of free cross-border data transfer (CBDT). However, post-2014, India’s espousal to this tacitly agreed-upon principle has gradually shattered. At present, India and the USA hold mutually contradictory positions on CBDT and data localization: the USA supports free CBDT and opposes data localization, while India stands against free CBDT and strongly upholds data localization. In this altered context, this article examines the capabilities, visions, and interests of both India and the USA. It analyzes how these factors influence each state’s policy preferences regarding CBDT and data localization. It also examines how their policy behaviors produce hindrances to achieving an India–USA digital economy strategic partnership. The article argues that, unlike the defense sector, an India–USA digital economy strategic partnership is highly unlikely. Insights from the ‘strategic partnership’ concept and theoretical assumptions of realism are utilized to support this argument.