The recent trade deal with the US might force India to change its long-held stance against a permanent duty exemption on cross-border electronic commerce.
A White House fact sheet on Tuesday said India has "committed to negotiate a robust set of bilateral digital trade rules that address discriminatory or burdensome practices and other barriers to digital trade, including rules that prohibit the imposition of customs duties on electronic transmissions".
For Washington, such rules are central to ensuring free cross-border data and digital services flows, predictability for global tech firms, and protection against what it sees as trade-distorting digital levies and regulatory barriers.
New Delhi, however, has historically taken a very different view of the issue in multilateral forums.
India’s WTO stance: Revenue loss and policy space
For over two decades, India has opposed making permanent the WTO moratorium that prevents countries from levying customs duties on electronic transmissions such as software downloads, video games, films, music, and e-books.
The moratorium, in place since 1998, was introduced at a time when digital trade was nascent. Indian officials argue that the nature and scale of digital commerce have since changed dramatically, making the continued ban on customs duties outdated and costly for developing economies.
Citing estimates by the United Nations Conference on Trade and Development (UNCTAD), commerce ministry officials have argued that India alone could be losing around $500 million annually due to its inability to impose customs duties on digital goods delivered online.
India and South Africa have jointly argued at WTO ministerial meetings that of the estimated $10 billion global annual revenue loss from the moratorium, nearly 95% is borne by developing countries. According to their submission, the percentage of customs revenue lost for developing countries is 4.35%, compared with just 0.24% for developed nations.
Ahead of previous WTO ministerial conferences, including the 12th and 13th meetings, India had indicated its intent to push for reconsideration of the moratorium and had demanded greater clarity on what constitutes “electronic transmission”.
Trade experts such as Ajay Srivastava of the Global Trade Research Initiative have argued that ending or revisiting the moratorium should be a priority for India, as its continued extension limits policy space for developing countries seeking to regulate and nurture their domestic e-commerce ecosystems.
Bilateral track offers a different framing
Against this backdrop, India’s willingness in bilateral talks with the US to discuss rules that prohibit customs duties on electronic transmissions marks a significant shift in tone, if not yet in final position.
According to India’s stated position, a structured digital trade framework with the US can reduce regulatory uncertainty, lower compliance friction, and facilitate smoother cross-border service delivery. This, in turn, could accelerate growth in digitally delivered services and expand market access for Indian IT, SaaS, fintech, and digital services firms in the US market.
Beyond tariffs: Data, privacy, and regulation
Experts note that India is also keen to ensure that digital trade discussions go beyond the narrow issue of customs duties and include broader themes such as data privacy, cybersecurity, consumer protection, and regulatory autonomy.
India has consistently argued at the WTO that e-commerce discussions should not be limited to preserving duty-free digital flows, but must also recognise the need for developing countries to regulate digital markets, protect domestic businesses, and ensure fair competition.
The current talks with the US are therefore likely to involve complex negotiations on how India can commit to predictable digital trade rules while retaining adequate policy space for domestic regulation.
