On India-US table: Locking in duty-free electronic transmissions | Economy & Policy News
The fact sheet, released on Tuesday (India time), also said India would remove its digital services tax.
“India will remove its digital services taxes and (is) committed to negotiating a robust set of bilateral digital trade rules that address discriminatory or burdensome practices and other barriers to digital trade, including rules prohibiting the imposition of customs duties on electronic transmissions,” it said.
Under a World Trade Organization (WTO) moratorium, countries do not levy customs duties on cross-border e-commerce transactions such as downloading software, e-books and similar products. For almost two decades, WTO member countries have extended this temporary measure every two years during ministerial conferences. Developing countries, including India, have argued for policy space to impose tariffs on electronic transmissions, saying the moratorium has had a negative impact on revenue collection.
More recently, however, Indonesia agreed, as part of a bilateral trade deal with the United States, “to immediately and unconditionally support a permanent moratorium on tariffs on electronic transmissions at the WTO.”
A trade expert said that while New Delhi is ready to ban the imposition of tariffs on electronic transmissions, other trading partners, including the European Union (EU) under the recently finalized trade deal, will seek similar commitments. India’s influence in WTO negotiations on this issue would also weaken, the expert added.
The Ministry of Trade and Industry only responded to emailed queries from Business Standard as of press time.
While India removed the 6% digital services tax, or equalization levy, on online advertising services provided by foreign companies from April 1, 2025, to address Washington’s concerns, trade economist Biswajit Dhar said the US statement could imply a commitment by India not to reintroduce such a levy in the future.
The White House fact sheet was released against the backdrop of India and the United States issuing a joint statement on Saturday announcing the finalization of a framework for an interim trade agreement.
The United States removed the punitive 25 percent tariffs imposed on India “in recognition of India’s commitment to stop purchasing oil from the Russian Federation.” A reciprocal tariff on India will be further lowered to 18 percent and is expected to come into effect soon.
The joint statement shared limited details on digital commerce. According to the statement, the two countries committed to combating “discriminatory or burdensome practices and other barriers to digital trade” and establishing “a clear path to achieve strong, ambitious and mutually beneficial digital trade rules under the BTA.”
Furthermore, in line with the road map outlined in the terms of reference of the Bilateral Trade Agreement (BTA) finalized in March last year, the two countries agreed to continue negotiations to address remaining tariff barriers, additional non-tariff barriers, technical barriers to trade, customs and trade facilitation, good regulatory practices, trade remedies, services and investments, intellectual property, labor, environment, public procurement and unfair practices or distorting the trade of state-owned enterprises, the factsheet says.
