India’s stance on data transfers at WTO spooks semiconductor industry giants

India’s stance on data transfers at WTO spooks semiconductor industry giants

Subject: Economy

Section: External Sector

Context: 

A global consortium of semiconductor industry groups has asked India to reconsider its plan to push for duties on cross-border digital e-commerce and data transfers at an upcoming global trade meeting (WTO) in Abu Dhabi.

Possible consequences: India’s stance will stifle its own chip design industry.

Main Agendas at WTO meet: Discuss several trade-related issues .Extending a moratorium in place since 1998 on applying duties on electronic transmissions.

Different perspectives on moratorium:

• Developing nations like India, South Africa and Indonesia are opposing moratorium.
• S. and Europe want to extend the moratorium.
• If no accord is made, the moratorium would expire this year.

World Semiconductor Council (WSC):

The World Semiconductor Council (WSC) is an international forum that brings together industry leaders to address issues of global concern to the semiconductor industry.

Comprised of the semiconductor industry associations (SIAs) of the United States, Korea, Japan, Europe, China and Chinese Taipei,  such as Qualcomm, Intel, AMD and Nvidia.

Goal:

To promote international cooperation in the semiconductor sector in order to facilitate the healthy growth of the industry from a long-term, global perspective.

According to the World Semiconductor Council (WSC) If the moratorium’s collapse then:Tariffs on digital e-commerce and an innumerable number of transfers of chip design data across countries will kick in .

Impact of tariff:

• Raising costs
• Worsens chip shortages

Importance of chip sector for India:

The chip sector is a key plank to push India’s economic growth, with a $10 billion incentive package in place to boost the industry.

Impact on India:

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.

Massive revenue loss:

According to New Delhi- 

• Physical goods like books and videos, once governed by traditional tariff rules, were now available as digital services and should be subject to duties.
• Developing nations are facing massive loss in potential revenue with such imports from developed countries on the rise.

Implications of India’s support to renew moratorium:

India’s support to renewing the moratorium will send a strong signal to semiconductor companies that India is an investment friendly environment.