A global collective of semiconductor industry bodies has urged India to reconsider its proposal to impose duties on cross-border digital e-commerce and data transfers ahead of an imminent World Trade Organization (WTO) meeting in Abu Dhabi on Monday.
The World Semiconductor Council has warned India that its stance could impede the growth of its own chip design industry.
The Monday gathering is aimed at addressing various trade matters, including the potential extension of a long-standing moratorium on imposing tariffs on electronic transmissions established in 1998, reported Reuters.
In 2022, WTO members had agreed to extend the moratorium on e-commerce duties. Supported by big players like the United States, Britain, and the European Union, the body believes that letting it expire would threaten a global e-commerce recovery.
However, countries like India, South Africa, and Indonesia are planning to challenge the US and Europe's push to extend the moratorium. If they can't reach agreement on a deal, the moratorium would expire this year.
In a letter addressed to Indian Prime Minister Narendra Modi on Thursday, the WSC warned that if the moratorium ends, it would result in tariffs on digital e-commerce and countless transfers of chip design data between countries and would escalate costs and exacerbate chip shortages.
The WSC consists of chip industry associations from regions like the US and China, representing prominent chip manufacturers including Qualcomm, Intel, AMD, and Nvidia.
The chip sector holds significant importance in Prime Minister Modi's efforts to drive India's economic growth, as evident by the $10 billion incentive package aimed at bolstering the industry.
The group wrote in the letter, the duties on data transfers would "also impede India's efforts to advance its semiconductor industry and attract semiconductor investment, especially as more than 20% of the world's semiconductor design workforce is based in India," wrote Reuters citing the copy of the letter.
The WSC even urged India to strive for a permanent WTO agreement preventing countries from imposing customs duties and procedures on cross-border data and digital tools.
New Delhi has argued that items such as books and videos, once regulated by conventional tariff regulations, are now accessible as digital services and should therefore be subject to duties. India asserts that developing nations are experiencing significant revenue losses due to the surge in imports from developed countries.
India's support to renewing the moratorium will "send a strong signal to semiconductor companies that India is an investment friendly environment," the group wrote.
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