At the G20 summit, Donald Trump said data localisation obstructs digital trade flow. (AFP)

US President Donald Trump today sent out a clear message to India and China over their insistence on data localisation, saying it obstructs digital trade flow. "US seeks free flow of data... and is eager to work with like-minded partners," he said at a special session on Digital Economy held as part of the G20 summit in Japan's Osaka today, signalling a hard stance on another area where the Washington and New Delhi are at odds.

"American success in digital economy is based on free flow of data, strong privacy and intellectual property protection, access to capital and innovation," President Trump said. "United States is committed to sustaining this approach to digital trade long into the future. We are eager to work likeminded partners around the world to advance these priorities".

India has said it said that it wants foreign companies to store data - personal, social or financial that are collected by search engines, financial platforms or social media sites -locally. The government has also promised a revision of e-commerce rules - a move that has alarmed US technology and financial giants operating in the country.

This would mean the companies will have to store and process data from Indian consumers in India and not abroad, as is currently the practice. For US firms, the new rules would prove expensive as complying would mean setting up fresh infrastructure in India.

While the government has outlined a draft policy, the Reserve Bank has said foreign payment firms such as Mastercard and Visa can process transactions made in India outside of the country, but should bring back the data for local storage within 24 hours.

In a recent report, the US Trade Representative - the government agency responsible for developing and recommending its trade policy - said India's stance is "discriminatory and trade-distortive" and said the US strongly advises India to reconsider it.

Ahead of India's upcoming auction of 5G Telecom spectrum, President Trump also spoke of the "resilience and security of 5G networks". US firms are interested in taking part in the process, Secretary of State Mike Pompeo pointed out in his recent visit.

"The digital economy is a crucial driver to economic growth. At the same time as we expand digital trade, we must also ensure the resilience and security of 5G networks. This is essential to our shared safety and prosperity," he said.