A global consortium of
semiconductor industry
groups has reportedly sent a letter to Prime Minister
Narendra Modi
, asking India to reconsider its stance on duties on cross-border digital trade and data transfers at the upcoming World Trade Organization (WTO) meeting.
In the letter sent on February 22 (via news agency Reuters), the
World Semiconductor Council
(WSC), representing giants like
Intel
,
Qualcomm
, and
Nvidia
, wrote that India’s position at the WTO mini-ministerial meet would be a blow to both global chip supplies and the country’s own ambitions of becoming a semiconductor hub.
The letter comes ahead of the WTO Meet, scheduled to be held next week, where India is opposing efforts by the US and Europe to extend a moratorium imposed since 1998 on tariffs on electronic transmissions.
India’s stance on digital trade at WTO
India, among other developing countries, has objected to the attempts made by the US and EU to prolong the moratorium. According to the Indian government, the rising digital imports from advanced economies are leading to substantial losses in potential tax revenues. As per the government's stance, digital books, videos, and other products, which were previously subject to traditional tariffs, should be levied.
Concerns raised by global semiconductor groups
The WSC cautioned that collapsing a WTO moratorium in place since 1998 on customs duties on electronic transmissions would disrupt international data transfers and chip design work critical to semiconductor companies.
Over 20% of the world’s semiconductor design workforce is based in India, contributing over $35 billion in annual revenue. Additional taxes resulting from the expiry of the moratorium would drive up costs and impediments for this workforce, WSC pointed out.
Global chipmakers are growing increasingly concerned about the potential negative impact that the expiration of the moratorium on new tariffs on cross-border data flows could have on the semiconductor industry. This could cause additional customs procedures on data transfers, which would exacerbate the already existing bottlenecks and production delays caused by chip shortages.
Appeal to support investment environment
The letter urged India to send a strong signal to global chipmakers about its investment-friendly credentials by backing the renewal of the WTO moratorium.
According to WSC, India's endorsement of renewing the moratorium would boost its position as a favourable semiconductor investment destination. To entice global chipmakers like Intel and promote domestic manufacturing, the government has introduced incentives totaling $10 billion.
India is taking steps to promote its own chip design firms that can power various sectors, including 5G networks, data centres, and electric vehicles. However, the growth of smaller Indian startups in semiconductor design could be restrained due to higher costs resulting from duties.
India is positioning itself as a neutral semiconductor production base amid tensions between the US and China. Experts told Reuters that the country has a strategic interest in supporting open cross-border data flows.
English (US) ·