The government’s plan to revive the Digital Competition Bill can complicate the ongoing trade discussions between the US and India and bring down India’s gross domestic product (GDP) by at least 1%, according to think tank Esya Centre.
On Monday, the minister of state for corporate affairs Harsh Malhotra told Lok Sabha that the government is going to undertake market studies before introducing ex-ante regulations for digital platforms, especially the Big Tech firms.
“Based on the suggestions received (from stakeholder), it is felt that an evidence-based foundation through market studies is required to consider all relevant aspects for ex-ante regulation considering it is in nascent implementation stages globally,” the minister said.
Concerns grow over trade ties, GDP and jobs
The impact of the Bill on trade negotiations stems from the US’ opposition to European Union‘s Digital Markets Act (DMA) whose key provisions are comparable to India’s shelved draft Bill. In March this year, the 2025 National Trade Estimate (NTE) report, published by the US Trade Representative, had called out DMA for its discriminatory and stringent approach towards US tech companies. “Given US concerns over the EU’s DMA, the DDCB could strain India-US ties and complicate digital trade discussions,” the think tank said.
As per Esya Centre, the impact of India;s draft Bill goes beyond the US-India trade agreement as it has estimated that the legislation could disrupt India’s growth trajectory, impact GDP and result in job losses. “The DDCB (draft) will bring about at least 1% decline in GDP, which is 1.08 times our (India’s) defence spending. The DDCB’s restrictions could raise costs, lower ad effectiveness, and erode consumer trust, harming the broader economy and MSMEs. There’s also likelihood of 1.25% employment decline, impacting 7.3 million jobs,” it said.
Introduced in 2022, the DMA has already caused a 30% drop in traffic for European hotels while forcing a 36% increase in reliance on paid ads. It has also triggered litigation between EU and tech firms – an outcome India can avoid amidst critical trade negotiations.
Govt reiterates need for caution
At a Competition Commission of India event in March, Malhotra said that the government is not in a hurry to bring the digital competition law. “In 2023, we have amended the Competition Act to tackle the issue of market dominance effectively. However, there’s still a need for digital competition law. After the due process, the government is keen on bringing this law,” the minister had said.
So far, both the ministry of corporate affairs (MCA) and ministry of electronics and information technology (MeitY) have conducted one round of discussions with stakeholders, particularly around the ex-ante regulations which are aimed at identifying the anti-competitive conduct beforehand. MCA has received over 100 suggestions on draft bill from different entities such as Apple, Meta, Google, Amazon and Uber.