Need to impose tariff on import of e-products
December 16, 2021
Due to worsening Covid situation in Europe, 12th WTO minister has been postponed. There are many examples from which it is clear that the agreements made in WTO, in the past were asymmetric agreements, in which developed countries managed to include provisions aimed at gaining market access in developing countries by hindering their support to industry, agriculture and other sectors of the economy and thereby, development of the developing countries. However, at the same time, wherever companies of developed countries could benefit, no stone was left unturned in ensuring the concessions from developing countries. Before this ministerial conference also, all the efforts made by developed countries has been going on to being made to prevent India from giving subsidies to their small fishermen, limit government procurement from our farmers and harm countries like ours by tinkering rules and processes of World Trade Organization. Though, there is a clear message emanating from official circles, that Government of India will protect national interests in the WTO; there is also a danger that the developed countries will try to isolate India by using their economic muscles.
It is said that trade is war. When the developed countries see the trade negotiations as weapons of war, then India also has to make the appropriate use of the trade negotiations to protect and promote interests of our nation.
In this context, the time has come to make efforts to do away with the 'temporary provision' of tariff moratorium on electronic products, which has been going on since the inception of the WTO. It is unfortunate that the developed countries, kept tariffs on the import of electronic products suspended on several pretexts. Today the situation is that more than US$ 30 billion of electronic products are being imported by India alone. That is, even if 10 percent tariff is imposed, then the Government of India will get revenue of more than US$ 3 billion. The issue here is not only about loss of revenue, it's a much larger issue for a country like India, where our startups and software companies are able to make a variety of electronic products, where we can make movies and other entertainment products in our own country, but when all such products are imported undeterred, without tariff, there is hardly any incentive to produce them in our country. This tariff moratorium on e-products is benefitting US, European countries and China.
Along with this, we also have to understand that production processes in the world are also changing fast. Today, in order to order any item from abroad, it is not necessary to import it physically. By 3D printing that object can be made physically using software and other materials in the importing country itself. That is, if this happens, then the country may also made to lose import duties imposed on the import of physical goods. That is, the issue is not only about loss of revenue on electronic products, but also of possible loss of import duties on physical goods in future. There is still no clarity in the world about definition of electronic commerce nor is there any consensus in the understanding of its. trade related aspects. Attempts are being made to confuse the subject of e-commerce and the scope of discussions on it using various tactics. India and South Africa are already working very carefully and aptly and have submitted their resolution to the WTO Council , where they have questioned the moratorium on tariffs on electronic products. The resolution states that the proposal for moratorium on tariffs on electronic transmissions (electronic products) in the 1998's ministerial conference needs to be reviewed. In this context, India and South Africa maintain that the 1998 resolution had not unanimously decided on the scope of the moratorium, and it was also unclear at that time that the digital revolution would spread so rapidly.
In December 2019, the member states extended this moratorium for six months till June 2020 (forthcoming 12th Ministerial Conference). Due to Covid 19, the 12th ministerial conference could not be held in June 2020. It was then said that the definition of electronic transmission would be clarified by the WTO member countries in the 12th Ministerial Conference. Now the 12th Ministerial Conference is going to be held. In this resolution of India and South Africa, wherein the views of many developed and developing countries have also been incorporated, it has been said that its now imperative for the WTO to review this tariff moratorium, in the interest of the developing countries; so as not only to regulate their imports, but also to give them policy space to formulate a prudent policy, to generate revenue directly by imposing tariffs and to achieve the objective of digital industrialization.
We have to understand that this issue cannot be ignored any more. India missed the first three industrial revolutions, due to which our industrial development was hampered and stalled. Today is the time of the fourth industrial revolution, which will come through digital industrialization. We must not lose this opportunity. When developed countries can go to any extent in the interests of their companies and their economy and put pressure on countries like India, by taking other developing countries along, also has to stop developed countries from disrupting our industrialisation. The imposition of tariff on electronic transmission will be the first step towards digital industrialisation.