By Munsif Vengattil
BANGALORE (Reuters) – A global consortium of semiconductor industry groups has asked India to reconsider its plan to push tariffs on cross-border digital e-commerce and data transfers at an upcoming global trade meeting, warning that India’s position would stifle its own chip design industry.
Ministers from around the world will gather for a World Trade Organization meeting in Abu Dhabi early next week to try to negotiate several trade-related issues, including extending a moratorium in place since 1998 on the application of tariffs on electronic transmissions.
Developing countries such as India, South Africa and Indonesia intend to resist attempts by the US and Europe to extend the moratorium. If no agreement is reached, the moratorium will expire this year.
Ending the moratorium would mean imposing tariffs on digital e-commerce and countless transfers of chip design data between countries, raising costs and worsening chip shortages, the World Semiconductor Council (WSC) wrote to Indian Prime Minister Narendra Modi on Thursday.
The chips sector is a key part of Modi’s agenda to boost India’s economic growth, with a $10 billion stimulus package set to boost the industry.
Data tariffs “will also hamper India’s efforts to develop its semiconductor industry and attract investment in the semiconductor industry, especially since more than 20% of the global semiconductor design workforce is based in India,” the group wrote in the letter, a copy of which was sent to India. Reviewed by Reuters.
The Prime Minister’s Office did not immediately respond to a request for comment.
The WSC includes chip industry associations in regions such as the US and China, representing chip stalwarts such as Qualcomm (NASDAQ:), Intel (NASDAQ:), AMD (NASDAQ:) and Nvidia (NASDAQ:).
New Delhi said physical goods such as books and videos, once subject to traditional tariff rules, are now available as digital services and should be subject to duties. Developing countries face huge losses in potential income as imports from developed countries rise, India says.
The WSC in its letter also urged India to work towards a WTO agreement that would permanently bar countries from subjecting cross-border data and digital tools to customs duties and procedures.
India’s support for extending the moratorium “will send a strong signal to semiconductor companies that India is an investment-friendly environment,” the group wrote.