India's Plan To Let 1998 Digital Trade Deal Expire May Worsen Chip Shortage

An anonymous reader quotes a report from Ars Technica: India's plan to let a moratorium on imposing customs duties on cross-border digital e-commerce transactions expire may end up hurting India's more ambitious plans to become a global chip leader in the next five years, Reuters reported. It could also worsen the global chip shortage by spiking semiconductor industry costs at a time when many governments worldwide are investing heavily in expanding domestic chip supplies in efforts to keep up with rapidly advancing technologies. Early next week, world leaders will convene at a World Trade Organization (WTO) meeting, just before the deadline to extend the moratorium hits in March. In place since 1998, the moratorium has been renewed every two years since -- but India has grown concerned that it's losing significant revenues from not imposing taxes as demand rises for its digital goods, like movies, e-books, or games. Hoping to change India's mind, a global consortium of semiconductor industry associations known as the World Semiconductor Council (WSC) sent a letter to Indian Prime Minister Narendra Modi on Thursday. Reuters reviewed the letter, reporting that the WSC warned Modi that ending the moratorium "would mean tariffs on digital e-commerce and an innumerable number of transfers of chip design data across countries, raising costs and worsening chip shortages." Pointing to Modi's $10 billion semiconductor incentive package -- which Modi has said is designed to advance India's industry through "giant leaps" in its mission to become a technology superpower -- the WSC cautioned Modi that pushing for customs duties may dash those global chip leader dreams. Studies suggest that India should be offering tax incentives, not potentially threatening to impose duties on chip design data. That includes a study from earlier this year, released after the Semiconductor Industry Association and the India Electronics and Semiconductor Association commissioned a report from the Information Technology and Innovation Foundation (ITIF). [...] It's possible that India and other developing nations may seek to narrow the moratorium rather than end it. An Indian government official told Reuters that "these issues need to be discussed and settled" before India can make a decision on whether to extend the moratorium.

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