India's stance on data exchange at WTO is spooking chip companies

Developing countries such as India, South Africa and Indonesia have resisted efforts by the US and Europe to extend the ban. If no deal is reached, the moratorium will expire this year

A global confederation of semiconductor industry groups has asked India to reconsider plans to push for duties on cross-border digital e-commerce and data transfers at an upcoming global trade meeting, warning that India's stance could cripple its own chip design industry.

Ministers from around the world will gather at the World Trade Organization in Abu Dhabi early next week to discuss a range of trade-related issues, including extending a 1998 ban on the use of duties on electronic transactions.

Developing countries such as India, South Africa and Indonesia have resisted efforts by the US and Europe to extend the ban. If no deal is reached, the moratorium will expire this year.

The World Semiconductor Council (WSC) wrote to Indian Prime Minister Narendra Modi on Thursday that tariff collapse would mean tariffs on digital e-commerce and myriad chip design data exchanges across the country, driving up costs and worsening chip shortages.

The chips sector is a flagship of Modi's plan to boost India's economic growth, with a $10 billion stimulus package to boost the industry.

Obligations on data exchange „will hamper India's efforts to advance its semiconductor industry and attract semiconductor investment, especially as India hosts more than 20% of the world's semiconductor design workforce,” the group wrote in the letter, a copy of which was reviewed by Reuters. The Prime Minister's Office did not immediately respond to a request for comment.

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The WSC consists of chip industry associations in regions such as the US and China representing chip stalwarts such as Qualcomm, Intel, AMD and Nvidia.

Physical goods such as books and videos, once governed by traditional tariff rules, are now available as digital services and should be subject to duties, New Delhi has said. As such imports from developed countries increase, developing countries face a huge loss of potential revenue, India maintains.

In its letter, the WSC urged India to work towards a WTO agreement that permanently prohibits countries from subjecting them to customs duties and procedures on cross-border data and digital tools.

India's support for renewing the ban would „send a strong signal to semiconductor companies that India is an investment-friendly environment,” the group wrote.

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